Mortgage  Question?
Are you required to refinance if you get landlord insurance?

I want to rent out a property I bought as a second home a couple of years ago. When I get a landlord insurance policy does the insurance company notify my lender and will my lender require me to refinance into a non-owner occupied mortgage?

Michael Jensen, Mortgage and Finance Guru
, Mortgage and Finance Guru

Your insurance company will notify your lender of your landlord insurance policy but this will not create an issue for you and the lender will not require you to refinance your mortgage. As long as you were truthful and accurate when you submitted your original mortgage application you will be fine.

Based on your question, it is pretty clear that the property was properly classified as a second home when you bought it which means you correctly obtained an owner-occupied mortgage. Most important, the home has not been rented out since you bought it. You should feel comfortable renting out the home now without the risk that your lender will require you to refinance your mortgage.

Please note that your situation is somewhat common as the occupancy status of homes changes for many borrowers after their mortgage closes. For example, after living in the property for several years some borrowers decide to move out of and rent a home they purchased with an owner-occupied mortgage. On the other hand, some borrowers decide to move into a home they had financed with a non-owner occupied mortgage after initially renting the property. In neither case does the lender require borrowers to refinance their mortgage due to the change in property occupancy status.

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About the author

Michael Jensen, Mortgage and Finance Guru

Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael

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