Mortgage Lenders Are Your Friends

When it comes to purchasing a mortgage, it is hard not to worry about all of the expenses and finding a good rate. It is understandable that under this pressure, it is easy to fib to a lender about your credit or the source of your payments, especially your down payment.

Some reasons people lie about the source of their down payment is that they may receive a higher interest rate if their source was a gift or grant. It may seem impossible to come up with the down payment and afford the interest rate, but there are options to help you afford these expenses.

Some people use assistance programs to help with the down payment and this is when they may conceal the source of the money. For example, a federal-housing administration-insured mortgage requires a down payment of at least three percent. If you do not have enough in savings, you can accept the money from a non-profit agency. The seller is not allowed to pay. The seller may then contribute the down payment in addition to a fee to the non-profit agency. Once the home closes, the non-profit agency will give the down payment. The buyer never receives the cash, it is simply a transaction made from the agency directly to the settlement agent.

All of this is legal and in compliance with the FHA-insured loans. This must be recorder on the HUD-1 statement, a form that is required for almost all home mortgages.

You may ask why it is so important to disclose all of the correct information when closing a loan. If nothing else, the answer is that it is a federal offense to make a false statement on a loan application. Any information that you know to be incorrect can constitute being a lie, and this will make you a candidate for a federal crime. More importantly, besides the risk of getting caught, there is no need to lie! There are so many options these days for people with poor credit or low-income, that it is really an unreasonable and unnecessary risk to be dishonest when applying for a loan. It may save you a tiny bit in interest, but is that worth the chance of being a criminal?