We blogged a while back about why overstating your income on a loan application is, in sum, stupid. So what do you do if your loan officer (who usually fills out the application) overstates your income and tells you to sign?
Before you walk away, make sure you re-read any agreement you may have with the broker. Especially if you are buying a home, you probably do have an agreement with your mortgage broker that says you owe them a penalty if you decide not to get a loan with them. However, if they can’t write you a loan you can handle, you probably are not subject to a penalty. Besides, a broker would have a hard time convincing a court that you should pay them a penalty because you refused to lie on your loan application.
If you’re in the clear, walk away. You don’t want to use a loan officer who wants you to lie on your loan application.
If you can’t qualify for a loan at your real income level, you probably have no business buying that home. Downsize or rent and save instead. — SAM GLOVER