Be Honest During The Application - When applying for a mortgage the most important thing you can do is to be upfront and honest during the application. Lenders will always find out if you have any outstanding collections, lapses in employment, late payments, or anything else you are not proud of. Failing to tell your loan officer about these types of items will not improve your chances of getting a loan or a better interest rate, so be honest from the beginning to make the process as smooth as possible.
If you lie on your mortgage application you are commiting a federal offense that is punishable by a very serious fine and possible jail time.
If you have financial or other dificulties that you think may affect your eligibility for a loan, it is still best to tell your loan officer about these things during the application. You may think that withholding the information will help you. In fact, they may find out anyway, and then they will have wasted a lot of time trying to get you the wrong loan for your situation. If you are upfront and honest, there may still be a way to work with your situation to get you a loan.
The final page of your 1003, or loan application, states in small print above where you are signing your name that: the the info. contained on the loan application is true and correct as of the date of your signature and that any misrepresentations that have been made on the application may result in civil liability. Civil liabilities which would include monetary damages to anyone affected or that would experience a loss because of the dishonesty or misrepresentations and/or in criminal penalties which may include fines or jail-time. therefore, before you sign your name make sure you have looked the application over and proofread it for any errors.
It doesn't make any sense to lie on your application. Everything is verified, and then re verified by an underwriter. The smallest of details will come up, and could cause you the chance of owning a new home or refinancing your existing home. Honesty is the best policy, because if something is wrong then your mortgage professional can help you to fix the problem.
Mortgage professionals take the loan process extremely seriously and making false claims will undermine any chances the mortgage professional will have in getting your application approved.
If you have a loan officer who suggests that you lie on your application, immediately go elsewhere--even if his advice seems to be in your best interests. A mortgage advisor must earn your trust by being trustworthy himself.
Remember that a stated income loan is goverened by the same rules. If you state a false income and get qualified, this may come back to haunt you several years later, since there is no statute of limitations in a criminal case.
Withholding crucial information or giving misinformation on the loan application often do more harm than good. All information given by the loan applicant are cross-checked with the credit report, appraisal report, bank verification, lien search, survey, bankruptcy search, name search, and half dozen other reports. Being dishonest usually end up costing the loan applicant time and possibly jeopardize the loan application.