Loan officer asking why I am downgrading?

[Javier G.]

Hi BP friends!                    

                          I will appreciate some feedback on the following scenario: I applied for a loan with my bank to buy a townhouse (asking 185k) which will be my primary residence. I currently live in a single-family home (450k). Since I will move to that property, the loan officer requested an explanation of why I am "downgrading." He said that it is usually or expected to "upgrade" but not downgrade. My strategy is to rent the current property and save a lot more money (1/4 of taxes, expenses..) to keep escalating on investments. I assume the question is trying to uncover if I am downgrading because of financial issues? Any advice on how should answer that question will be much appreciated.

Thank you!! Javier G.

[Russell Brazil]

They are asking to see if you are going to commit mortgage fraud. They want to make sure your new primary isnt really an investment property.