profyt7

Mortgage Qualification Question

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I am interested in purchasing a primary home and a four family rental property That is already rented out so that the rents can pay for my mortgage....I have been pre approved through two different lenders. If i submit an offer on both properties and they are accepted would i be able to purchase both of them with a same time close?? or would it show in the system that once i buy one i may not qualify for the same deal on the other house.

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I am interested in purchasing a primary home and a four family rental property That is already rented out so that the rents can pay for my mortgage....I have been pre approved through two different lenders. If i submit an offer on both properties and they are accepted would i be able to purchase both of them with a same time close?? or would it show in the system that once i buy one i may not qualify for the same deal on the other house.

One lender approved you for the rental and the other lender approved you for the primary residence?

And you didn't tell lender a about the primary residence and you didn't tell lender b about the rental?

If I'm reading that right, then,

That's mortgage fraud. don't do it.

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Right i didn't tell them...But i thought if it were this easy everyone would be doing it. So if i tell each of them about the other approval and other home will i be in compliance...What kind of impact does that normally have on the loan.

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Right i didn't tell them...But i thought if it were this easy everyone would be doing it. So if i tell each of them about the other approval and other home will i be in compliance...What kind of impact does that normally have on the loan.
My 2 cents:

A few years ago, this thing was going on with brokers all the time with a wink and a nod. The increased risk of loss to the lender by this little scheme was reduced by ever increasing home prices so they looked the other way. Now lenders crack down because home prices are stagnant are falling and they want a) higher % down to reduce risk and B) higher rate to compensate for risk premium.

If they catch on prior to closing, then they'll withdrawal the offer. And your mortgage contingency clause in your agreement of sale won't save you because there is a clause that nullifies the cancellation clause if any facts in the mortgage application were materially false or omitted. Technically, the seller then has remedies to force the sale, keep your down payment as liquidated damages, or sue for damages (I think modern real estate agreements limit buyer breach damages to down payment). If you get through the closing and either lender catches on, then they can call the note. You'd have to imemdiately refi and pay off the note or sell, eat the commission/tax charges, and pay off the note. If you get away with it totally, then good luck to you. You beat the system like many others.

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Right i didn't tell them...But i thought if it were this easy everyone would be doing it. So if i tell each of them about the other approval and other home will i be in compliance...What kind of impact does that normally have on the loan.

If you do this on the up and up,

I think you can count 75% of rental income in your income sheet. Meaning if the 4 units rent for $4000 total, and you make $4000 monthly, your monthly income to use to qualify for both properties would be $7000 - $3000 (75%) of the rental income and $4000 for your regular monthly income.

Your interest rate on the rental should be higher regardless since this is not your primary residence. If you initially said you would live in one of the rentals, then you probably got a rate quote lower than it should be. If you go in buying two properties, obviously both won't be your primary residence.

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I would like to do it on the up and up...I do not want to do anything illegal. one property i told them was going to be my primary residence. The other i told that it would be investment and i would not be living there.

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I would like to do it on the up and up...I do not want to do anything illegal. one property i told them was going to be my primary residence. The other i told that it would be investment and i would not be living there.

I'd try to go through a single lender. The lender would make more money on the loan and would be more willing to work harder to get the loan to go through.

I just think it'd be A LOT simpler to work with a single lender.

But....

This is two separate properties. I don't know if a single lender is the best way to handle this.

Without knowing any of your situation, details, income, costs, etc, My advice would be to buy your primary residence and THEN worry about a rental property. But again, I don't know all the details and I'm not a real estate expert.

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One thing no one else has mentioned. How is your rental property paying its own and YOUR mortgage. Rental properties have enough trouble breaking even on their own, much less actually giving you positive cash flow to put towards something else.

I hope you aren't overlooking expenses or buying some late night informercial real estate guru's books.

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To keep legal and away from potential mortgage loan fraud issue/s, here is what you should do. Tell both of the LO's (or yes, you will probably get a better deal working with one of them) that you HAVE the other property purchased, just not closed on it. If with that scenerio you get an approval on both of them, then you are good to go.

If you get caught and it is determined that you have commited mortgage fraud at the very least one or both lenders can inform you that you have 30 days to pay off the loan you have with them.

You could lose both properties if you could not get new financing for both.

Charles

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One lender approved you for the rental and the other lender approved you for the primary residence?

And you didn't tell lender a about the primary residence and you didn't tell lender b about the rental?

If I'm reading that right, then,

That's mortgage fraud. don't do it.

It's only mortgage fraud if s/he signed something stating that there were no other applications outstanding at the time of the application or she was obligated by agreement with one lender to tell the other that she had assumed more debt.

Barring those scenarios, if both loans closed contemporaneously, then s/he may not have committed fraud at all.

Just make sure your t's are crossed and your i's are dotted.

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