Buying a house has never been easy. Thanks to the different mortgage programs nowadays, purchasing the home of your dreams is now possible and made more affordable.
If you’re an aspiring homebuyer, it is essential to shop around for Mortgage Loans Midland as well as lenders to find the best home loan deals. Before you apply for a home loan, make sure not to make the following mortgage frauds!
Faking Your Employment Income
Your lender will make sure that you’re financially stable by checking your employment status. There is no use in falsifying your income levels as mortgage lenders will ask you to provide tax returns and pay stubs during application. You will not get approved for a home loan if your monthly income and DTI ratio do not pass their requirements. If you do find a way to trick your lender, you can end up receiving a higher mortgage you will eventually fail to pay back. If this happened, you need to get a real estate lawyer for a better understanding of it.
Asking Someone To Give You A Down Payment Loan In Disguise
There are rules when it comes to accepting down payment gifts. One is that you should not repay the person who gave you the down payment gift. If the giver expects you to return the funds in the future, then lenders will consider it as a loan – not a gift. You and the giver will sign an agreement stating you received the funds as a gift, and that the giver is not expecting you to repay them. Your lender will require asset documentation, or else they will flag the transaction as invalid.
Undisclosed Deals Between You And The Seller
All deals discussed between the homebuyer, and the seller needs to be disclosed in the mortgage documents. For example, you are able to make an offer to the owner of the house you plan on buying. After the home inspection, some home repairs are in order. You made a deal with the seller that you’ll be receiving funds from them that will cover for the expenses of the repairs. If you don’t make your lender aware of such transaction, you’re already committing mortgage fraud.
Some mortgage programs require borrowers to buy the property and use it as their primary or secondary residence. During application, your lender will let you know the type of properties you can buy with your mortgage of choice. For non-owner-occupied properties, they tend to ask for higher interest rates. Misrepresenting the mortgage risk increases the level of risk for the lender; thus such act is still a fraud.
Posing As The Homebuyer
Some individuals will ask family or friends to get a mortgage for them to buy a house. Their reasons vary – but one common reason is they can’t get a mortgage approval. So, if you’re not the real homebuyer, you’re putting your name in the line since you’ll be the one applying for a mortgage.
Understating Or Overstating The Home Appraisal
A home appraisal refers to the estimate of the actual market value of a house. This is a fair process that assesses how much the home you wish to buy is worth it. Understating and overstating the home appraisal is also a type of mortgage fraud which falsifies the real value of a house you’re planning to buy.
Recommended Read: What You Should Know About Home Appraisals