Advice obtained from lender - is this legal?

gvarsub · Joined: 18 May 2007 Posts: 1 1.49 Dollars($)

We will be buying our first home within the next couple months and just went to talk to the first lender (our bank) today. We will be relocating out of state and at the same time our income will be dropping and it will be non-guaranteed income (in the form of graduate student stipends). However we have a very large amount of money in savings. We were told that only our income matters, not savings, and that the biggest issue was the year-to-year nature of the income (although I would think it's just as stable income as any job...). It was recommended that we get the loan approved on our current income before changing jobs, and because it would look weird that we are trying to buy a house out-of-state, to say it's either a second home or a primary residence just for my husband, not me (since our current income is mostly from my job). She also said that after we move and our income situation changes, it won't matter because we already have the loan. Is this legal or could this possibly be construed as fraud? We have the cash to pay the mortgage but are worried about this "stretching the truth" about it being a "second home". It looks like we either have to do this or take some kind of alternative mortgage that doesn't require income disclosure, but pay a much higher rate (~1.5% higher).

Guest 0.10 Dollars($)

Think about it this way.

Second home is a home which is not your primary residence. But you do not have a primary residence. So how you could be purchasing a second home.

ckalvesmaki · Posted: Sun May 20, 2007 5:12 pm Post subject:

First of all welcome to Mortgage Fit.

There isn't any requirement that you own a property in order to own a "second home". The way it was suggested to you by the bank LO however is an issue if they recomended that you call it a "primary residence". The problem with the new income as that it would need to be garaunteed for 3 years......

I would however suggest that if you have money to put down....say 10% I would call it a rental or an investment property the rate will be only slight ly higher but you are not misleading the lender either.

Samantha

Hi gvarsub,

Welcome to the forum.

I don't think it will be considered as fraud until and unless you hide your details from the lender. If there are chances that your income will be reduced, it is better that you inform the lender about it.

There are lenders who offer loans to low income people also. And, the fact that you have a decent amount of savings will hopefully help you to make sufficient down payment on your purchase price. And, in this respect, it does matter as far as getting a mortgage loan is concerned.

Hope this helps...

God bless you.

Samantha

mikeshapiro · Posted: Mon May 21, 2007 10:13 am Post subject:

Easiest way to put it is, if its not the truth its fraud.

It doesn't matter what your lender says is ok, or if they put false info on your docs without you saying to. You will need to sign the documents stating everything is correct, which makes you guilty of fraud IF it is not the truth.

Just tell the truth, on your loan documents and you will be fine. Smile

If it's an investment home then claim it as that. If its truly a second home, then that's what it is.

There is a big uproar right now with fraud where loans are being made as a second home or primary residence when it is really a rental property. I can't advice you strongly enough to avoid making this mistake.

Good luck on the new purchase!

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