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My lender refuses to convert my second home to my primary residence so I can refinance. What can I do?

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Q: Before retiring, I purchased my home in Orlando, Florida in 2002 and moved into it as my primary residence in 2006.  My mortgage lender refuses to change my home's status to my primary residence because I initially purchased it as a second home.  Because they won't change my home's status to my primary residence, I can't enjoy the no cost streamline refinancing they've recently offered their customers.  I am paying 6 percent in interest and don't know how to resolve this. Obviously, my mortgage lender wants to keep my rate at 6 percent since that means more money for them.  Is there anything I can do?

A: The open question is why you didn't notify your lender of the change in status back in 2006 when you took possession of the home as your primary residence. You should have done so.

It is not clear whether or not you were asked to prove primary residency or not, but you may try to escalate the issue with the lender at a higher level to see if a change can be made. You may be required to show documentation (tax returns, utility bills, etc.) as proof of the change in status.

Failing that, while you might not be able to change the mortgage holder's mind, there should be nothing which prevents you from refinancing with another lender. No, you won't get the "streamline refinance offer" that the lender is making to other clients, but you would be able to resolve both issues--getting a new mortgage and changing the status of your loan--at the same time.

There is an important lesson here for others. If you should convert a second home to a primary, you should inform your mortgage holder and homeowners insurance company.

About the author:

KTGA 25-year expert observer of the mortgage and consumer debt markets, Keith Gumbinger has been cited in thousands of articles covering a wide range of consumer finance and economic topics in outlets ranging from the Wall Street Journal to the Bottom Line newsletters. He has been a featured guest on national broadcasts for CNN, CNBC, ABC, CBS and NBC television networks and has been heard on NPR and other national and local radio programs. Keith is the primary researcher and writer for HSH.com's MarketTrends newsletter and has authored or co-authored a number of consumer guides on mortgages, home equity, refinancing and more.

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