Lender has to know it is my primary or investment property?

11 Replies

I am looking at the refi rates...and as you know investment properties are expensive to refinance. But....just a thought....is it possible to simple tell the bank it is my primary residence even though it is a rental property? how would they know???

Sure, it's possible to tell them that, I suppose. But don't be surprised when they:

1) Don't believe you because all your supporting docs will show your real primary residence on them.

or

2) Do believe you, then find out you lied and slap you with mortgage fraud.

It will not end well.

Yes most likely they would not find out, If they do they can demand full payment. Let me also add I own a company that does inspection work for all different types of lenders. They are now starting to have us, during our routine inspections ask who is living in the home.

my understanding is that you do not want to be anywhere in the realm of mortgage fraud. In the event that a representative from some third party auditing firm swings by and knocks on the door to check on you- you would have a lot of explaining to do. I may be way out of my league on this one..

I have no doubt that @Bill Gulley can give you the best answer, as he knows this stuff cold

Loans are reviewed after the are made, months after by examiners and compliance folks. It's mortgage fraud to lie, federal offense, 10 years, 100K fine. How do they know? LOL. Trust me, you can't hide it. Part of what I did. :)

@Marc Dufour - That would definitely classify as mortgage fraud and could land you in very hot water. Plus the lender would most likely find out when they pull your credit and find another mortgage on your report. It would not be worth it.

Just live in it for awhile. Yes it has to be an owner occupied but not forever. Most rentals are trickle downs from owner occupied anyway.

But do not lie on any mortgage application. Nothing good will come from it.

I remember reading on one app it stated "Intent to occupy the house as a primary residence"... I haven't seen that in a while though. Don't lie on it. Like said before just live in it for a while then rent it out.

The question is on the 1003 App, always has been, always will be. The loan has to be classified, can't even make a loan on a residence without asking.

The loan will be reviewed within one year, usually several times at different levels depending on the type of loan.

After one year, the occupancy becomes irrelevant, within that first year, it's relevant.

We have a couple other bank examiners here, I can assure you they will not be listing the tactics and techniques used to investigate matters, I won't either. I'd say within 3 to 6 months your odds of being identified would be about 90%, next 3 months maybe 75%, end of the year 50%, just IMO.

Not only would you need to understand audit trails but you'd need to really go out of your way setting up documentation before you even applied for the loan and then you might increase your odds, but if you did that, you'd certainly be prosecuted!

Do not lie on a loan application!!!! :)

There's your answer - live in it for a few months, then apply to refinance and plan to live in it for another 12 months. You could turn it into shared housing as I do with my own props and model. Take the smallest room, put all utils in your name and rent the other rooms. I have several homes where I have kept a room for myself to either use to work from or sleep at on occasion.

How could they catch you,,do you have that property homesteaded? If you don't have a mortgage on your residence, there is a chance you would get by with the mortgage fraud,,but frankly I just don't see paying 1/2% more in interest worth my lying to the government and committing a felony,,,I just like to sleep at night

At closing of the loan, you will be signing documents that you intend to occupy the property as the owner. When you get a loan written on an investment property, that same language often appears in the loan docs, but then there is an addendum or rider that states you do not intend to occupy the property.

Since you are refinancing they just have to look at your current residence.

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