3 Little White Lies that Can Hurt Your Home Buying Chances
At some point in our lives, we’ve probably had to tell a little white lie. (That haircut looks great on you, by the way!) And while most of us feel a little fib here and there won’t hurt anything, when it comes to buying a home, honesty is always the best policy. And because obtaining home financing and an affordable mortgage can be a tough process for homebuyers, it’s understandable that some would chose to stretch the truth to work in their favor. What’s a little white lie going to hurt? Turns out, those small untruths can come back to hurt you and backfire in a major way in your home buying process. Here are 3 little white lies that can hurt your home buying chances.
White Life #1: Primary Residence
Who will occupy the house is the most common white lie when it comes to home buying. A home buyer may tell a lender they are purchasing the home as a primary residence but are in fact planning to rent it out as an investment property. Buyers do this to obtain a lower interest rate and lower down payment as lenders charge a higher interest rates and down payments on investment properties as opposed to primary residences. Lenders consider this stealing money from them by making them take on more risk than they agreed to and if caught, you could lose your home financing.
White Lie #2: Your Income
Obviously how much income you make has a huge impact on qualifying for a home loan. But being dishonest about the amount of money you make can hurt you more than you think. Your lender is going to verify all of the financial information you provide on your application, so if your tax returns, bank statements, W-2 forms, and supporting documents don’t support your income claims, you likely won’t get the loan. It’s best to just be honest and not doctor your statements or fudge the numbers to obtain financing.
White Lie #3: Hiding Your Debt
One of the most important factors to getting approved for a home mortgage is your debt-to-income ratio, which is how much of your income you have to pay out each month to cover all your debts. So some borrowers will fib and hide certain debts on their mortgage application to try to make it look like they owe less than they do. The reason this could blow up in your face is that established creditors report your debt and payment history to the credit reporting agencies which are pulled by your lender. So they will definitely find discrepancies on what you owe versus what you say you owe. Also, when you sign off on a mortgage, one of the things you sign is a statement that the information you’ve provided is accurate to the best of your knowledge. So if the information on your application is not accurate, then that’s mortgage fraud. Penalties for mortgage fraud range as high as thirty years in prison and a $1 million fine.
Little white lies have no place in the home buying process, because altering the facts in any way that affects your cost or ability to get a home loan is likely to hurt your home buying chances. Believe it or not, even the busiest of lenders stringently verify your application information so small untruths have a way of resurfacing. Need help with the home buying process? Contact the Russo Team today and we’ll help you find the right home. And that’s no lie! - Frank
Search the MLS Now!
Join us on Facebook and Twitter