1. “I am buying this home with an owner occupied loan but I plan on selling it right after closing and doing this again. I want to do this until I get 10 properties.”
Okay this one happens quite a bit. This isn’t an episode of “Flip This House” and you’re not a real estate tycoon like Donald Trump (I don’t care how bad your hair is). If you are going to build a rental portfolio you are not going to do it by moving every 60 days with a loan that doesn’t require a down payment. Us lenders don’t require 20% down payment on investment properties for fun, we do it because of the alarming amount of risk we take in lending on a home that you don’t live in.
2. “I am going to pay back the gift I got for my down payment right after we close.”
Do you know that FHA is the only loan that allows you to use a gift for every penny of your minimum down payment? Do you know how often people use that option? HUD is giving you a heck of a favor by allowing this feature so let’s not screw it up, okay? When you use a gift for a down payment you and your donor sign a form stating that the gift is exactly that….a gift.
3. “Tell me what my tax returns need to say for me to qualify for this loan and I will re-file my taxes later.”
No. I know that it is frustrating for self employed people to qualify for a mortgage but tax fraud is not the answer. You have the ability to write a lot of your expenses off and lower your taxable income but we can only work with the income that you report to Uncle Sam. By filing your taxes to qualify for a mortgage then re-file them to lower your taxable income you are committing both loan fraud AND tax fraud. This will get you a new house that is 6 X 8 for the next 20 years or so. On the plus side your new room will have cable.
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