Avoid Mortgage FraudMortgage fraud is deception about your financial circumstances or how you’re going to use the property that you purchase. If fraud is detected at any time during the mortgage process, your loan will be declined and you will be out any funds you’ve already paid, such as the appraisal fee or your earnest money deposit, says Casey Fleming, mortgage adviser at C2 Financial Corp. and author of “The Loan Guide: How to Get the Best Possible Mortgage.”

And even if your loan closes, that doesn’t mean you’ve gotten away with any deception. If it’s caught later, your lender is likely to call the loan,...