Owner occupied loans have some requirements that you may not be aware of. For example, with owner occupied loans, flipping your home like 6% of 2016 homeowners did is not an option. Getting familiar with what owner occupied loans really require is essential to the success of managing your mortgage.

What Is an Owner Occupied Mortgage?

As the name implies, owner occupied mortgages are available to people that plan on buying a home and living in it. Owner occupied loans are easier to secure than other types of loans but they come with caveats that other loans do not come with.

Why Do Lenders Like These Types of Loans?

Approval rates are higher with owner occupied lending because the mortgage company sees you as having a vested interest in the property. You are less likely to default on a mortgage when it is attached to your primary residence.

Read the Small Print

Before you leave the closing table it is vital that you understand exactly what you are agreeing to with owner occupied loans. Fannie Mae, Freddie Mac, VA, HUD, and FHA loans often have owner occupied requirements. If you are uncertain about your obligations, do not be afraid to ask questions.

You Must Live in The Home

Owner occupied means that you will live in the property. In most cases, before you can do anything else with the home, you have to live in it for at least 12 months. After the 12 month period or whatever period you agreed to, you can rent out the home or sell it.

The Lenders Will Know If You Break The Agreement

Do not make the mistake of thinking that once the loan closes you can flip the house or rent it out. Lenders have ways of checking to see if you are living in the home. Lenders have been known to do drive-by checks to see if the home is occupied, check license tags in the driveway, and check insurance records to see if renters’ insurance has been issued for the property.

Learn More About Mortgage Options

Owner occupied loans are popular, but they are not your only choice. Consult with an expert in mortgage financing to learn more about your mortgage options.