How to Stay Away From Mortgage Fraud

How to Stay Away From Mortgage Fraud

How to Stay Away From Mortgage Fraud

When it comes to something as important as your mortgage, it is best to stay away from these offenses.

There are things like white lies which are not so bad. There also exists mortgage fraud which can put you in some real trouble. The line between the two, however, is not as clear-marked as one may think. It is essential for all homebuyers to know where this line ends because the consequences can be dire if it is crossed. Here are some things from which to stay away and avoid mortgage fraud.

  1. Hiding Debt: Your lender can decide how much home you can actually afford based on your monthly debt-to-income ratio. I.e. the total amount of your monthly dues (utilities, food, gas, streaming accounts, et cetera), divided by the amount you make monthly.
  2. Occupancy Fraud: When it comes to occupancy fraud there are typically two varieties of it:
    i. Purchasing investment, but claiming it as a personal residence.
    The main reason that people do this is because of the savings that are associated with this practice. The cost of an investment property is usually 2.5 percent of the loan amount.
    ii. Claiming the home will be a vacation home, but rent it out; claiming the home will be a primary residence when it’s going to be a second home.
    If you buy a home near a beach or mountain range, or other vacation-like home, you will have to provide solid evidence that you do in fact live there as your primary residence.
  3. Hiding Source of Down Payment: Getting enough for a 20 percent down payment on a home may seem like an impossibility. That is why it might make sense to borrow or receive money from a relative, especially one who does not ask for interest. Lenders need to see the whole financial picture, because that money you’ll be paying back, affects your mortgage payment in one way or another.

Avoid mortgage fraud by following these three simple tips. Contact Elvin Wesley at Ranch & Coast Mortgage Group Inc. for all of your home loan needs throughout Solana Beach and San Diego County, as well as all of California.