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Hello folks!
I'm relocating and as a means of not having to move twice am purchasing my home in NC as a 'vacation' or 'second' property.
I'll be using cash on hand to pay the down, etc on the new place all the while not letting on to the new lender that I'm selling the old place.
The old place will sell and close about a week before the new place closes.
Am I violating any laws by letting the new lender think I still own this other property? I'm not clear how much of their decision to approve the new loan the lender based on my owning another property.
I'm not a lawyer, but if they are willing to approve you for a second home, you must have enough money/income to be approved, so what's the problem? The only issue I can see is tax treatment (and gov't rebates that would not apply).
Why do you feel the need to tell the lender otherwise? IF anything, I would think selling your old place would only be a positive thing.
My concern was not the selling it. It was when we sold it. That property was used as “collateral” to qualify for the second home. There is no law against selling the home. It’s just the fact that it actually sold before our second home even closed. I don't think anyone would have sold us our PRIMARY home here in North Carolina when we didn’t even have jobs out here? They were basing our ability to pay the mortgage on jobs in California and we/ they had our house in Cali as collateral in case we defaulted.
Ultimately only you know if you will be able to pay for it. I would imagine it's easier for you to have only one mortgage, but will you have a job when you move here? Legally that may be an issue because if you have no collateral, and no income then there is nothing to base the new loan on. Have you closed on the sale of your CA home and the new home in NC already?
By "collateral" do you mean to say that the lender on house #2 expects you to grant a mortgage on house #1? And you're saying that by the time you close on house #2, you won't actually own house #1 any longer? So when they slide the documents in front of you to sign, what do you plan to say? Frankly, I think you're closing is going to go bust, they won't fund the loan, and may have some rather nasty things to say to you in the process.
I'm totally confused...using a house as colleteral? I don't know any lenders that do that.
However, anything that you DON'T tell the lender that is relevant to the purchase of your home is LOAN FRAUD and I don't think you'll get away with it and if you do, and you get caught...it is a federal offense. Not practicing law so please ask an attorney to advise you.
my guess is that the loan for the NC property would not close since the lender will likely verify all of the information about your CA property (if it's "collateral") just before closing the NC home. but like some have said, an attorney will be your friend.
why try to defraud in the first place? it's not worth it.
Perhaps collateral is the wrong term. I'm just saying the NC lender thought we still owned something that we did not. When the loan docs were signed here in NC, this lender thought we still owned the property in CA. When in reality, that property had sold and been closed on two weeks earlier. The CA home was not in any way used to 'secure' the NC loan though I'd assume it didn't hurt our chances at getting financed for a second place. It was probably more important to the NC lender to call our CA employers and ensure we were still employed at closing, which we were. I suppose it doesn't matter if the asset (home) was liquid or non as the money's the same.
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