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My New Mortgage

by Juan D.
(Sacramento, CA USA)

I bought a home as owner occupied but I really want for my son to live there, I will be paying the mortgage, he will just pay utilities, is it legal? What are the consequences?

=====ANSWER=====

Hello Juan;

I appreciate your coming by and asking your question here in my blog. I hope you are finding my website helpful to you.

You stated that you purchased a home and put yourself on the loan application as the owner occupant. You plan to have your son live there while you make the payments on the mortgage.

First off, you're a great dad! Your son should be proud to have a father like you.

However, I just want to say that I'm no legal professional or anything of that sort. For legal advice you would have to talk with a blood sucking lawyer. (Sorry, I don't have a great deal of respect for lawyers!)

One thing I do know is the mortgage process and furthermore I understand the mortgage contract.

The reason you were ask if you planned to live in the house is for the lender to evaluate their risk. An owner occupied house is less risk to the lender than a non-owner occupied.

They will offer a lower interest rate for owner occupied than the other. They look at non-owner occupied homes as investment homes so they charge a higher interest rate and a much larger down payment.

You signed a contract stating that you will make the home your primary residence. Now I'm not sure how the homestead laws are in your state, but the title company may be filing on your behalf for this new home to become your primary residence. This is so you can pay less property taxes.

If you already own a home, then you lose the homestead exemption on the former home. That may be something you will deal with in the near future.

As far as the mortgage contract, I hate to be blunt but I don't know how else to say this, but that is mortgage fraud.

So I hate to be a bearer of bad news bad that is what the law states. The repercussions for doing this are rather stiff. Especially in light of the mortgage crisis in recent years, Obama passed a new law in May of 2009 making it tougher.

What you want to know is that if the lender finds out that any part of your loan application truns out to be false, they could require or should I say demand full payment of your loan. More importantly, you may have the FBI ringing your door bell. It is a very expensive fine and or jail time involved.

So my advice to you is to have an attorney ready in the event your lender discovers what really happened.

I know this is not the best news for you, but this is not a matter of my opinion. That's why I gave you that quote.

With all due respect sir, I wish we could have talked before hand.

I wish you the best.

Kind Regards,

Jeffrey Ragan






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