Refinancing a House - Non-Owner vs Owner Occupied

by Michele in White Lake, MI/ Wiesbaden, Germany and Roy in Gaffney, SC

Ask Kate about refinancing a house and how to tell if it's non-owner occupied or owner occupied: Lender occupancy agreements are not to be taken lightly. In most cases, a property is owner occupied or it isn't. But sometimes, a homeowner's situation isn't that clear cut.


Introducing Michele who keeps a house sitter in her Michigan home while on temporary assignment in Germany. You'll also be meeting Roy, a South Carolina pastor who works remotely in a church 30 miles from his home.

Refinancing an Owner Occupant Home While Living Outside the US

By Michele S. in White Lake, MI/ Wiesbaden, Germany

Refinancing a House - Non-Owner Occupied vs Owner Occupied

I am currently on assignment in Germany. I will be here for another 19 months.

We still have our house in Michigan. A friend lives in the house, but we do not charge him rent, as he maintains the house for us.

Since we brought all of our furniture to Europe with us, we have Rental insurance on the property.

When we visit Michigan, we always stay in our house. We were there for a total of 5 weeks last year. When we return to the US, we will move back into the house.

We do not own any other residence. My company pays for my residence in Europe.

I would like to refinance my house at a lower interest rate (currently at 5.25) and for a shorter term. We have 20 years left on the current loan and I would like to reduce to a 15 year fixed.

Can we do a refinance? Will our location be an issue?

***zz-portrait-left.shtml*** Ask Kate answers: Refinancing an Owner Occupant Home While Living Outside the US

Hi Michele,

Your situation is not cookie cutter. Your home is not a rental property because it produces no income.

On the other hand, it is easily identifiable as non-owner occupied since you are physically living in Germany, albeit temporarily.

Insurance Policies Define Occupancy Status

As you know, fulfilling the conditions of an owner occupancy agreement will ensure you a lower mortgage rate at less cost. But right off the bat, I can tell you if your house is insured under a rental policy, it won't be simple to convince a lender that your home is truly owner occupied.

So your first task is to pick the brain of your insurance agent. Explain your dilemma to him or her and ask if there is a better type of policy for a home that is not being rented while the owners are out of the country.

How Not to Create Suspicion Over Occupancy Status

Secondly, if you have any hope of getting a lower owner occupied mortgage rate, you need to clearly explain your occupancy arrangement to the underwriter in a detailed letter before you are asked about it. I found this is the best way to avoid suspicion.

Here are details to include at a minimum...
  1. Offer the contract that shows your stay in Germany is temporary and how often you return to the states.

  2. If you have a written agreement with your house sitting friend, include it to show he pays no rent.

  3. Also give the lender your tax returns from last year to show you did not collect any rental income.

Non-Owner Occupied Mortgage Rates and Fees

I also suggest that you get a couple of Good Faith Estimates for a non-owner occupied 15 year fixed rate mortgage. You may be pleasantly surprised at the payment's affordability based on today's low mortgage rates.

But be aware of low quotes, too good to be true. Go to How to Reduce Mortgage Refinancing Costs to avoid being taken advantage of by an unscrupulous lender.

John from Albertville, Minnesota wrote me with another owner occupancy question. You can read it at Ask Kate about Refinancing Guidelines and Occupancy Certification.

Best wishes for refinancing your home,


Hardest Hit Funds and Occupancy Agreement Rules

By Roy L. in Gaffney, SC
Hardest Hit Funds and Occupancy Agreement Rules


I was looking to obtain assistance under the Hardest Hit Fund and was declined because of the owner occupancy rule. I cannot find their guidelines anywhere.

I am a pastor providing services to a church 30 miles from my home. The church provides me with a parsonage to live in. I receive no wages for my services. I am basically working out of town on an extended stay.

I know that is acceptable for SNAP guidelines.

I maintain my home of 20 years in the event something happens to me or I leave the ministry. I have seen many pastors who left their spouses homeless, I will not. The residence is not rented, but my daughter resides there with my grand-daughter. My wife spends several days and nights a month there.

I have been unemployed since August. My unemployment ran out weeks ago. We are living off of my wife's disability check which after her medications leaves a few hundred dollars.

Without some help I will lose my house. Any suggestions?
***zz-portrait-left.shtml*** Ask Kate answers: Hardest Hit Funds and Occupancy Agreement Rules

Hi Roy,

The US Treasury's Hardest Hit Funds (HHF) guidelines differ from state to state.

South Carolina's HELP program is designed exclusively for full-time owner occupied properties of homeowners suffering from unemployment, underemployment, major reduction of self-employment income, medical expenses, divorce, or death of a spouse.

SC HELP offers monthly payment assistance, lump sum payment assistance, and transition assistance if the home cannot be saved.

The homeowner does not need to be participating in the Making Home Affordable Program to be eligible and does not need to have fallen behind on monthly house payments. Click here for a list of states participating in the Hardest Hit Funds Principal Reduction Program.

Family Services, Inc in South Carolina

Alternately, a SC organization that may prove to be helpful to homeowners who do not live full time in their homes is Family Services, Inc located in North Charleston, SC. Call them for help at 800-232-6489 or locally at 843-735-7802.

Best wishes,

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