If you lie, here is what Fannie Mae says "In the event that I do not occupy the property as my primary residence in accordance with the above certification, I shall pay Ten Thousand Dollars ($10,000) to Seller as liquidated damages, which amount shall be in addition to Seller’s right to retain any earnest money deposit and any other funds then paid by the Purchaser as liquidated damages pursuant to Section 19 of the Real Estate Purchase Addendum and any other remedy available to Seller at law or equity. Additionally, I agree to pay Seller’s reasonable attorney fees and costs incurred by Seller in enforcing its rights hereunder."
The underlying reason is there is increased risk to the lender if the property is used as an investment property it will become a foreclosure, short sale, etc. If you own a primary residence and an investment property and things go wrong, as we have recently seen, which property are you going to let go first? In the vast majority of cases, it will be the investment property.
Remember, lending money is all about the risk/benefit analysis. For every increase in the possibility something will go wrong, the lender is going to charge more for that circumstance. Primary residence vs. investment; just reducing your interest rate with a refinance vs. pulling cash-out; higher credit scores vs. lower; higher loan-to-value vs. higher down payment--you get the idea.
It is all about offsetting the lenders' increased risks with higher fees being charged to compensate.
Contact me if you have any additional questions or need a great lender with whom to work...
Helps to eliminate misunderstandings & potential loan fraud, among other things...
Hope that help,
Roswell Moore, CMPS
Certified Mortgage Planner
We are a Direct Lender, Mortgage Bank where we originate, process, underwrite, fund, AND SERVICE our loans, in-house, with FHA (starting at a 580 score AND still only 3.5% down), FHA Streamline loans (NO minimum credit score, NO appraisal required) Go Green rehab loans, HomePath, Investor Friendly (10 financed properties), VA, USDA, Jumbo, Conventional, plus, we allow Escrow HoldBacks!