OfflineGoodmorning everyone,
I am working with a potential seller and he asked me about the primary residence clause in his contract. I have seen many posts re: due on sale clause but not much on the primary residence clause, which many mortgages have. Can anyone advise me on how you are addressing this issue? Im located in AL.
Thanks all for your support.
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Steve
We seldom get what we want, but we will always get what we expect.
This clause is in a mortgage to help give the lender the further assurance that this home will be your Primary Residence. Lenders do offer better terms via interest rate, to home buyers who view the home as their primary residence. They have discovered that when borrowers have financial trouble, they will fight harder to save their primary residence than a vacation home, or a property held as an investment.
The loan application asks whether you intend to occupy the property as your primary residence. Occupancy can be defined as occupying within 30 days of loan closing and remaining for at least a year. You will have to see if Occupancy is actually defined in the mortgage.
This is an excellent point made by The Mortgage Professor. You can sign up for new articles by the mortgage professor at www.mtgprofessor.com. He does do a great job explaining some of the minor details in a mortgage. This does definitely explain many of the issues that we face when trying to get the best deals from a lender. You should always review the terms of your mortgage and ensure that you do not violate the terms of it. If the terms are violated you could possibly be in default and your mortgage be called by the lender. The lender always wants the utmost protection when loaning money to any prospective buyer. Always keep this in mind when filling out any loan application. This is important information that will affect you on purchasing property and when you try and sell if you are trying to sell on contract using the existing financing.
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think of it from another angle. Banks can't make you live in your home against your will. As Shawn said above, they just want to make sure that when you get a homeowner loan, you are making that your primary residence. Once somebody initially fulfills that agreement, the owner can sell, lease, rent, L/O or anything else he wants. The bank just wants their payment. (Of course, buying a home subject-to is another subject and you have to be aware of the due on sale clause if you proceed in that direction.)
Always Looking to Acquire Houses | Always Looking to Amaze Investors
Goodmorning to you sir and thank you for this excellent advise that helps me and the other (not newbies) investors in training understand all the nuancies of REI. It is great to have members like you and so many others in the family to go to for good advise.
Btw, I enjoyed the article you posted yesterday. Have a great day Bill!
Steve
We seldom get what we want, but we will always get what we expect.