What happens if the bank thinks u are useing the loan for one thing and u use it for another thing?

Well, in my opinion, your examples don't mesh...because the bank works differently with regard to real estate loans. A real estate loan has to be secured by real property, so they would need to know up front what address that real property is. On the other hand, if you get a personal loan for something that is unsecured (no real property attached to it) you can use the money for whatever you choose.

That won't work. Because when you get a home loan from a bank, they will work directly with the closing firm. They will give the money straight to them in accordance to the asking price of the home. If you get a personal loan for home enhancements, then they give the money straight to you.

Getting a new home loan is very different. The bank requires proof of the home's existence as they actually own it while you are paying for it. Must provide inspections, deeds, appraisals.

You won't get a mortgage for a new house unless there have been inspections and appraisers and approval of contractors and plans and had the land appraised and many, many other steps. There's no way you will get the mortgage in the first place.

i don't think there is anything they can do once they have given you the money. once it's in your posession it is yours and as long as you pay them back there isn't much if anything they can do

Call a lawyer and ask them. one of those free lawyers...

Contrary to common belief, the bank does care (I was in banking for 6 years before having my family), if you agree to take the loan to build a new home, the bank is first in line to put a lien on the title to the house. What that means is that if you don't pay your bills, the bank is first in line to foreclose on your house and sell it in order to get their money back. You get the money when they get the contract to build. If you somehow managed to get the loan without that contract, then you got lucky and I'd say keep your mouth shut. Should you want to brag and the bank finds out, you've defaulted on the terms and the agreement of the loan (because they have nothing securing the money...i.e.; the house...their interest is being able to recover the money should you default through non-payment) and would then be responsible for paying the loan in full upon demand. My advice? Don't do it, it's not worth it. There are a TON of lenders out there that will give you a home equity line of credit or home equity loan (they are two different things) without having to resort to fraud to get what you want to get done. Good luck.

first, a bank is not going to give you a loan for a new house unless they take out a mortgage on the property along with a promissory note for the debt. the title company would regulate the event so the bank doesnt get scammed. if it's an inexpensive property, maybe an investment property, they may give you an unsecured loan. following your scenario, if you did not use the proceeds for the purpose of the agreement, you would be in breach of the contract. and all that small print would come into play which wouldnt be good for you (i.e. immediate repayment of the loan, fraud charges, law suit). on the other hand, if they did not find out and you paid the loan on time and to maturity or balance, then no harm no foul.

If you get a loan from the bank to build a new house, you may qualify for the loan based on a goverment program which guarantees a portion of the loan to the bank as security for providing the loan to you, the lender or the new mortgage may be the collateral for the loan. If you do not use the loan for the specified purpose as in your loan agreement, the bank could demand full payment of the outstanding balance of the loan. If unable to pay for the loan, and the mortgage was the collateral for the home, they could forclose on your current home that you made the improvements on.