Posted by River City on February 11, 2004 at 07:46:39:
Is this a trick question? Didn’t you say this is an owner-occupied loan? Doesn’t that answer your question?
If you go through with the loan, you are committing fraud and you are subjecting yourself to fines and imprisonment. Read the language on your loan application.
I have known of lenders that call the full loan due and payable once this is discovered. As a matter of fact, I researched the issue for one of the largest lenders in the nation. A borrower stated that she was going to occupy the property as her primary residence. She didn’t occupy the property. The lender said she either had to pay the difference in the rate or pay the loan in full. If she had told the truth in the first place, she would have saved herself a lot of heartache. Since she had already closed, she didn’t have the funds to pay the difference in the rate, and couldn’t refinance the loan because it was less than two months old and had no equity. If she had been truthful in the beginning, she would have obtained a loan on investment property, which is what you should do, if you want the property.
Do the right thing. Tell your lender that the situation has changed and the property will not be owner-occupied. You will also have to sign a statement at closing indicating that your financial and employment situation has not changed. It has changed. Save yourself from the headaches that will come from committing fraud. If you decide to go on with the loan as is, then you deserve whatever happens. Hopefully, you are an honest person and will not commit fraud.
You know what is right. Just do it!