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Will the bank know my second home is really a rental if I try to refinance it as a second home?

I currently live in Nevada but have a second home in Texas. My mortgage on the second home is with Wells Fargo at a 30 year fixed with a 6.25% interest rate. My Credit Union in Texas has a 7 year fixed mortgage with an interest rate of 4.05%. I would like to refinance the home to get this lower rate, however, I cannot if the house is a rental. The Credit Union requires 20% equity and the interest rate is 4.55% on a 7 year fixed mortgage for refinancing of an investment property. I would like to know if I try to refinance the house as a second home without telling the bank it's a rental, will they know? The original loan was for a second home even though it was a rental from day one (I inherited the current tenants who still live in the home). I only ask this because I will be switching banks and wonder wether or not they would find out.
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April 03 2009 - Sunnyvale
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Profile picture for user863942
These days, banks ask for two years tax returns if you current income is insufficient to pay all your mortgages.  I'm afraid we are stuck with honesty.
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October 01 2012
EXCELLENT!!!!!!!!!!!!!!!!!!
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April 18 2009
Profile picture for James Tracy 1980
Thank you for all the answers to my question. I went to my credit union and spoke with a mortgage banker explaining everything to her. She is going to work with me to help get me fully compliant with the law and refinance the home properly as a rental.

JT
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April 17 2009

Yes, while you are at it, might as well have the appraiser jack the appraisal an extra 10K to improve your LTV to go along with the occupancy fraud.
Loanm8kr, he cant be that stupid that he is claiming the rental income and depreciating the property, and also thinking about claiming it a 2nd home.

James Tracy, this is the wrong place to ask for a fraud road map. There are 5 or 6 others ways you can get tripped up and I hope no one lays it out for you to use.

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April 16 2009
Remtal income will be on your tax returns or on the tax transcript many lenders order if you sign a 4506T.  Lenders look at a rental property as having higher risk - if you had financial problems, which roof would you keep, the one over your head or your renters? That's why the rates are higher on rentals. At loan signing there is a form you sign certifying that you now occupy the home or will within a short number of days. It's not just a little white lie, it's fraud against the lender who has based his approval partly on occupancy status.
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April 16 2009
Honesty pays I tell truth but the truth.
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April 15 2009
Profile picture for tylerdurden88
If you tell them that the Texas prop is your primary then how will they find out? They might notice that your mailing address is different. They might see that the rate on the Nevada prop resembles a primary. They might ask ask for a utility bill. Sure, they might find out. Would they? 
And if they find out whats going to happen? They probably won't report it to any authorities and even if they did, you think an ADA is going to spend a second of his day on a borrower that can claim ignorance or a borrower that might point the finger at the lender? No. 

And if they did find out, when would they? Most likely just before it funds. and then you'd just lose whatever money paid to an appraisor. If they find out a year or two into it, not only could you explain it, but if you are paying on time, they won't do a thing.     probably.

What do you all think in this hypothetical situation?
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April 03 2009
You do realize that you're printing your plan to defraud a bank in a public forum, right?  You might want to rethink this plan, especially the part about displaying your idea on a well-known web site.
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April 03 2009
 
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