In today's world Bank are more and more cautious, the quality control process is getting more and more stringent and the methods and procedures that the banks are using today is insurmountable by most individuals and borrowers. Most lenders are now using a report that can actually give them every thing you did for the last 20 years, including where you lived, what you owned, where you worked, what taxes you paid, how you paid, and even how your previous mortgages were signed. They know fairly quickly if that rental property was purchased as a primary home or vice verso. The days of banks not doing any due diligence are fairly well over, and even though it seems that it is a "too little, too late" mentality the quality controls in place today are working.
This is why it is so important that you discuss with your lender or loan officer what you really intend to do with the property you are purchasing. If you are buying a home and really do not intend to live in that home, you must disclose it. Sure it would be nice to get that loan with far less money down, or at the more attractive terms that offered to individuals who intend to occupy rather rent the home, but not disclosing can lead to disaster. I have actually seen banks that will hire someone post closing (usually within the first 6 months) to go out and verify if the borrower is actually living in the house. Among other things they will also verify whose name the utilities are in. Guess what, if you bought as a primary home and rented it instead of moving in, you have big trouble on your hands now. At the best case, you loan will be called due in full. You then have 30 days to payoff the mortgage or the bank will start foreclosure proceedings. This can destroy you financially as well as ruin your credit. At the worst case, and I have seen this happen, they will charge you with fraud and material misrepresentation and will attempt to prosecute you. This is bigger trouble than it is worth for slight difference in rates and terms. Granted you may in the short term get away with putting less money down, but what good is it when you will be faced with all these potential problems.
A good Loan Officer or Lender can help you navigate the financial products and tools that are available to you for your particular scenario. They will help you assess the situation and recommend different financing programs that will help you accomplish your goals and needs. Lending is very finite today, and you must have a professional that knows all the guidelines, and all the products that you can leverage to accomplish your goals. A good Loan Officer or Lender can help you accomplish your goals and keep you out of trouble. In today's world you should be interviewing your Lender just as much as they interview you for obtaining the loan. I would recommend you ask your Loan Officer the following questions;
How long have been a Loan Officer?
Where have you worked over the last 5 years? (Hint you want someone with at least 5 years of experience)
What type of continuing education have you had?
Are you familiar with all the legal changes in the lending industry over the past 12 months? What are they? (If they can not answer this, you know the answer!)
What type of loan products do you have available?
What area of lending are you most experienced in?
It is just as important for you to know about your Loan Officer as it is for them to know about you. Avoid unforeseen problems, by becoming the most educated consumer you can be. A true professional will have no problem answering your questions, those that do not want to answer your questions or give you a hard time should throw an immediate red flag.
Please also remember just because you do business with Big Bank ABC, with regard to your checking / Savings does not always mean they are the best option for financing. Check with your local lenders as well, you will be surprised to find out that Big Bank ABC does not always offer the best terms.