The home buying process can be a stressful time. That may be why many potential homeowners take shortcuts, such as telling white lies to lenders.
Unfortunately, that can backfire in a big way.
Common Ways to Hurt Your Home Buying Opportunity
In this competitive housing market, securing your dream home can be difficult. But when you do have that opportunity, the last thing you want to do is make a misstep that could jeopardize your chance of securing your home.
You claim the home will be your primary residence but plan to rent it out.
You can ruin your home buying chances by claiming you plan to live in the house when you plan to rent it out - this is a big no-no when applying for a mortgage.
Lenders want to ensure that the home is used as the primary residence and not an investment property. If they discover you are renting out the home, they may deny your loan application or change the loan agreement terms.
Misleading your lender can lead to a significant financial setback and even halt your home buying dreams. To avoid this, be upfront and honest with your lender about your intentions for the property.
You aren’t honest about where the funds for your down payment came from.
Lenders must know where the money for your down payment originates.
A white lie can lead to mortgage fraud, application rejection, and legal consequences. Be honest and transparent with your lender about the source of your down payment.
You omit debts in your application.
Even small debts can significantly impact your ability to get approved for a mortgage. They can affect your debt-to-income ratio, which measures how much of your income pays off debts.
A high debt-to-income ratio can make it harder to qualify for a mortgage or result in a higher interest rate.
When you apply for a mortgage, your lender will review your credit history to assess your financial stability and loan repayment ability.
One common mistake that homebuyers make is omitting debts from their application, even if they are small or insignificant.
If you fail to disclose a debt during the application process, your lender may assume you are hiding something and reject your application.
Despite charges for late payments, you insist you pay your bills on time.
Late payments can harm your credit score, which measures your creditworthiness.
Even if you pay your bills within the grace period, late fees can still appear on your credit report and lower your credit score.
When you insist that you consistently pay your bills on time, despite late fees, you provide inaccurate information that can misrepresent your creditworthiness to your lender.
You describe your pet incorrectly.
When moving into a co-op or condominium community with rules regarding pets, some people misdescribe their pets, especially the size and breed of their dog.
This lie can have significant consequences if you're caught, and it's not worth the risk.
A Smooth Home Buying Process
While buying a home is an exciting and significant decision, honesty is essential. White lies may seem harmless at the time, but they can have severe consequences down the road, from mortgage fraud to eviction.
Always be upfront with your lender, real estate agent, and housing community about any potential issues or concerns. Being honest will ensure a smoother homebuying process and help you find a home that meets your needs and expectations.
If you are in the market for a Washington D.C., Maryland, or Northern Virginia home, contact us to see how we can help!
The Glass House Real Estate Team
We are passionate about empowering home buyers and sellers. Our team brings a wealth of knowledge and experience. We will help you seamlessly navigate the home buying or selling process stress-free.