We Are Pulling Credit Report Right Before Closing

Fannie Mae requires lenders to pull your credit report again, right before closing.  This is important to remember, because an additional pull of your credit, can mean lower scores – which we’ve seen create last minute headaches.  We’ve seen several situations in the last few months that delayed closing. Someone charged up their charge card, maxing out a credit card can cost you more than 10 points on your credit score!

Additionally, we are required to verify that any credit inquiries you have in those last few days prior to closing are not really an extension of credit!  So don’t buy a sofa, or a refrigerator… or ANYTHING ELSE between the time of loan approval and closing… or you could be jeopardizing your closing date!

Lenders are now required to run a second credit check right before the loan funds… just to make sure you haven’t run up your credit cards, bought a new car, or added any sort of debt DURING THE MORTGAGE PROCESS.  (for more details click here)If any new debt appears, the loan does not pass GO, you are headed straight back to the underwriter to be re-approved.

Here are the rules for managing your financial life DURING THE PROCESS of making an application to buy a house:

1. Don’t use your credit cards or keep use to the bare minimum.  We recommend everyone stick to their debt cards.
2. Don’t take on new debt by buying a car, a boat, or a vacation to Mexico.
3. Don’t close credit cards and place balances on a new cards.
4. Don’t co-sign with anyone on a credit transaction.  If your brother needs your help buying a car, it must wait until after closing.
5. Don’t close checking accounts, savings accounts, and then move money into new accounts.
6. Don’t put any LARGE deposits into your checking or savings accounts. If you do, keep a record of where the money came from…copy all documents: withdrawal and deposit slips, and the check. You are going to need to “source” the funds, and explain where the money came from.  Here are some ideas on how to get money to buy a house 🙂
7. Don’t use your equity line.
8. Remember: lenders do not allow you to come to closing with green paper money that your have hidden in your mattress.
9. If you are required to pay off debt to qualify, don’t do it in advance, since proving the account is paid off can be a problem. Pay off debt right through the attorney in conjunction with your closing.
10. Do not Pay Off Collections prior to making a loan application – there are some debts we will need to pay off, and others that might be able to wait.  ALWAYS ask a loan officer prior to paying off or closing an account.

Your funds to close the loan cannot come from an account that you have not disclosed to the lender. Neither can your deposit on the house. All money that goes into the transaction must come from an account that was revealed on your mortgage loan application.

Here’s a great list of Five Things to do Before you Write a Contract to Buy a House.

So what are you waiting on?  When you buy a house, you get a RAISE!  (It’s TRUE! Check out the Tax Advantages of Home Ownership!)  Go ahead and get pre-qualified, just remember there are somethings to remember once you make loan application, especially the fact that we are going to pull a credit report right before closing.

If you are considering a new home purchase, and a FHA home loan in NC – please call Steve and Eleanor Thorne,  919-649-5058.  We can help you though the process… and we have the best mortgage loan rates!