Saying you pulled it out to buy a property and were effected would set off some red flags.

This does two things: 1) Triggers your mortgage company to procure very expensive lender-placed coverage on the property, and 2) Raises a red flag about the title transfer. 

Rehab loans have a lot of red tape around them, so unless you are doing major renovations it's probably not worth messing with that. 

The problem I am running into is that the co-signer will not also be occupying, which was a red flag for this lender. 

@Carrie Mims Could be a potential red flag that no permits were pulled or the municipality does not consider that area of the home to be "livable square footage".

Huge red flags.

Obviously house-hacking a duplex, triplex, or a quad would help make your mortgage payment, but you would still be in the red, as far as budgeting for other operating expenses go. 

@Peter WaltherTo get into the disctinctions between fraud & forgery is not my intention in the article, nor to opine on the various reported cases of alleged title fraud (for example, who would prevail in a given action), merely to encourage property owners to be aware of red flags & risk factors, & take steps to make their ownership more secure. 

Friend and family tenants and referrals can be some of the worst, so make sure you are not overlooking any red flags.For $600, I would say it's worth paying for a degree of separation.

@John Boyd If there are any red flags they will be found during the inspection and determines if you want the house.