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Not quite the same but similar...
A friend got a grant from the city to fix up her historic house, then rented it out. Took them a while to notice, but they insisted she live in it or repay the grant.
Its fraud and subject to fines and jail. Huge fines.
And lenders do occasionally check. We bought a home to be owner occupied but were remodeling before moving in. Due to a tile defect we had to re order all floor tile which delayed installing kitchen cabinets. Someone stopped by from the lender at around day 65 wanting to know if we were living there.
Say I go to a bank and they pre approve me for 97% LTV Personal living property and 3 months later i rent it out. I dont live in it but I make all the payments.
Do the banks care?
I want to use household debt as a hedge against inflation, and should a deflation recession occur, I would want to continue to pay off the mortgage without forcelosing on home, which will happen if i burn all my cash reserves on 20% down payment.
No. Make sure there's nothing about perjury in the contract. But fraud requires you to receive something material above and beyond what you would have normally received. A gain. A loan is not a gain. A loan must be paid back in full, whether it's 80% of the purchase price, or 97%.
They just want their money. This has little to do with you actually residing in the home and not profiting off of it being a rental. They say this because they want a reason not to extend you a second loan on the same terms.
No. Make sure there's nothing about perjury in the contract. But fraud requires you to receive something material above and beyond what you would have normally received. A gain. A loan is not a gain. A loan must be paid back in full, whether it's 80% of the purchase price, or 97%.
They just want their money. This has little to do with you actually residing in the home and not profiting off of it being a rental. They say this because they want a reason not to extend you a second loan on the same terms.
I wonder if the lenders get their underwritten guarantee for FHA/USDA if they decide to call the loan and get exactly what they think they're going to get: $0.
No. Make sure there's nothing about perjury in the contract. But fraud requires you to receive something material above and beyond what you would have normally received. A gain. A loan is not a gain. A loan must be paid back in full, whether it's 80% of the purchase price, or 97%.
Investment loans generally have higher interest rates AND require higher down payments than loans for owner-occupied properties. Fraudulently buying a house as an owner-occupied property at a lower interest rate and with a minuscule deposit are both material benefits.
In addition, insurance for a rental property is different from homeowner's insurance. If the OP fraudulently rented out the property and something went wrong where she needed to use the insurance on the property, she'd be out of luck.
I actually rent out a single-family house that I bought as an owner-occupied residence -- the difference is, I LIVED THERE for 9 years before I made it into a rental! OP, just live there for a year (that's typically what's required), then rent it out.
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I'm always amazed when posters come here and say "I plan to break the law. Is that OK?" I'm even more amazed when other posters chime in with advice about how to do it.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,347 posts, read 8,564,711 times
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Amazing how many people feel it's okay to commit fraud as long as you don't get caught or can bend the facts by lying saying you intended to live there.
I wonder if the lenders get their underwritten guarantee for FHA/USDA if they decide to call the loan and get exactly what they think they're going to get: $0.
None of that has anything to do with telling a bold-faced lie.
Amazing how many people feel it's okay to commit fraud as long as you don't get caught or can bend the facts by lying saying you intended to live there.
I guess that's the age we live in. Too many people playing follow the "leader".
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