Lies That Can Hurt Home Buying Chances

Dont Lie When Buying a Home

Lies That Can Hurt Home Buying Chances

Lying on a mortgage application could lead to a full repayment, fraud, or a conviction

Getting a mortgage and buying a house involves a great deal of money. If you stretch out the numbers on a mortgage application, this can have a direct impact on how much money you’ll get approved for, if you are even approved for a loan.

If you tell a little white lie here and there on your mortgage application, and the loan company finds out, you could be left with a boosted interest rate, demanded immediate repayment, IRS complications, a hefty fine, and a potential conviction.

What you should be completely honest about:

Who will live in the house
A person can apply for a mortgage to buy a home as their primary residence when they actually plan to rent it out as an investment property. Lenders charge higher interest rates on loans intended to buy investment properties than those meant for primary residences. From the lender’s perspective, you’re stealing money from them and making them take a bigger risk than they agreed to.

Your income
While it is difficult to exaggerate your income as the lender will check your tax returns, W-2 forms, and bank statements, it is not impossible. However, the lender will request a copy of your tax return, along with obtaining one from the IRS directly. If these do not match, your application will be denied.

Where you got your down payment funds
If you’re short of cash for a down payment and borrow money from a family member, it must be declared. This is considered a loan, which equates to debt in your name. If the money was a gift, most of the time the lender will want a letter from the relative stating that the funds do not need to be repaid.

A false co-borrower
If a borrower doesn’t earn enough to qualify for the desired mortgage, a co-borrower, often a relative, states that he or she plan to occupy the residence and contribute towards paying the mortgage, when they have no real intention to. Any late payments on your part will damage their credit report. This will end up harming their ability to buy a house or take out a loan in the future.

Your length of employment
Some people may be tempted to stretch out the length of their employment with a particular company. Lenders typically like to see at least two years of steady employment before approving a mortgage. By saying that you’ve worked for the same company for three years, when you’ve only worked there for a year, or asking a friend to pose as an employer will hinder your chances of being approved as your tax returns will not support the claim you have made.

For a personalized mortgage loan that suits the needs and situations of every individual, visit Ranch & Coast Mortgage Group Inc. We are located in Solana Beach, California, but serve all of the surrounding areas! Contact us today!