Home > Mortgage Loans > Lying about Your Income to Secure Mortgage Loans
Lying about Your Income to Secure Mortgage Loans |
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Taking the Moral High Road When It Comes to Taking out Mortgage Loans Obviously nobody would like to resort to lies in order to get mortgage loans. However, you could be a self-employed professional with a low income. If so, you don't make a very attractive prospect to lenders and financial institutions dealing in mortgage loans. But at the same time, you could be in possession of considerable assets with a perfect credit history, as well. You may be under the impression that you are the ideal candidate for a no-ratio mortgage loan. But when you go to a mortgage broker, you find out that you only have a chance of getting a lower interest rate with a stated income loan. You might have to invent a fictitious income figure on the application, which is large enough to qualify for the lender's requirements. You may be hopeful that perhaps the lender is not likely to follow up on your income details. Eventually it will probably turn out that the mortgage lender was right. There are certain facts about mortgage loans that you need to know which you are not likely to find out about from your broker. But Is Lying the Best Policy When It Comes to Your Mortgage Loans The risk involved in basing your mortgage loan application on lies is directly related to the chances of getting found out. But it is also true that giving a misleading picture on your income is rather easy to get away with. However don't ever forget that to your mortgage broker the risk doesn't matter as his role is limited to entering the number provided by you. Therefore it isn't himself who is in danger of getting caught but you alone. A stated income loan is meant mainly for self-employed people including you who encounter difficulty in documenting their income. The usual procedure is that the lender qualifies you based on the income you state on your application. Going by the assumption that the lender takes your word for it and believes what income you claim to have, the cost of a stated income mortgage loan will be lower than a no-ratio loan. Never forget that on a no-ratio loan too the lender will qualify you based on your income. What are the Risks of Lying When It Comes to Mortgage Loans? In the case of mortgage loans, the extent of risk in a false income being declared on a stated income loan is quite simple. At the time of closing, the lender may ask you to sign an authority letter to grant access to your last two tax returns from IRS. Usually most lenders will do a spot-check on around 10% of all loans during their own quality control process. Should you happen to be selected for the spot check and discrepancies discovered in the figures, you could find yourself in a soup. The lender has the right then, to insist on immediate repayment of the loan or resort to legal action. Even if your broker sounds very confident about the chances you stand, it is nevertheless a risk you have to be prepared to face. |
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