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Richard, Lawyer
Category: Real Estate Law
Satisfied Customers: 53666
Experience:  32 years of experience as lawyer in Texas. I'm also a Real Estate developer.
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Hi, Im considering purchasing my first home in Sacramento,

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Hi, I'm considering purchasing my first home in Sacramento, CA, and my lender is asking me whether or not I will be living in the home or if I will be renting it out. While I plan to live in the home initially, I could see myself eventually renting it out so I'd like to know what the law states for this matter.
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good morning. As long as your intent is to live in it for now, you can simply tell the lender you will be living in the home. That does not bind you to living in it forever or prohibit you from changing your mind at some point to rent it out. It's simply an issue of intent as to what your plans are when purchasing it. Generally, in order to satisfy the safe-harbor of "intent," as long as you live there for a year, the lender doesn't ever later question your original intent.

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Customer: replied 3 years ago.

Okay, so if I make it past the 1-year mark then there's no question. What if, for example, I get a reduction in pay in 6 months and think it would be wise to share a room at a friend's place while renting out my home, is this likely to be prosecuted? Is it fair to say that unless you default on your mortgage after making a risky investment and they can show that you never planned to live in the home, that this type of lawsuit rarely occurs?

Thanks for following up. The one-year mark is just a safe harbor. If something happens in the first year that changes your circumstances and thus your intent, that will not cause you a problem. And, you're right, these things only come up if the loan goes into default. :)
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