A lot of game playing goes on in the home buying arena. Here is a simple truth – the money you will save by lying about loans, Buyer’s incomes, and debts is not worth the risks. Whether you look at it from a faith-based, moral-based, or legal I could-go-to prison basis, it rarely works out. Be truthful about all things when buying a home and getting a loan. If you have committed a fraud by lying about one of these conditions, the seller usually has the right to cancel the contract.
Here is an example. Let’s say I am an attorney living in Vail, Colorado with an office in Denver. Occasionally, it snows bad enough that I can’t get home to Vail and I decide to buy a little condominium for those nights when I am snowed down the mountain. So I apply for a loan to purchase my second home from a new home builder in Denver. Three weeks before the close of escrow a couple walks into the sales office and says, “We are the renters for the attorney’s unit and we want to see it.” The attorney has lied, committed fraud, and the salesperson is obligated to report this to the lender. Because the loan will now be denied the seller may choose to cancel the sale. The reward – a better interest rate that would save the attorney $20 per month on his payments. The risk – a lost contract, or worse yet, a permanent timeshare residency in Ft. Leavenworth, Kansas for a year or two.
The people who are responsible for obtaining your information before approving the loan will be quite diligent. When it comes to debts, income, time on the job, time in your career, credit scores, and other elements it is highly unlikely that you will sneak anything past them. If you try, and they catch you trying, you can expect lender’s documentation hell to kick in and this will delay your closing at the very least. Once they consider you a liar, it is almost impossible to get them out of their 1000-questions mind set.
So tell the truth. If you don’t know just say, “I don’t know, but I will find out.” You can check your credit card and other debt balances at www.annualcreditreport.com or on the last statement the creditor sent to you. If you have bad debts or unpaid collection accounts or judgments you will want to know this before you start shopping for a home so check it in advance.
<< Chapter 19 Chapter 21 >>