Effective (June 18th, 2010), as part of the new Fannie Mae Loan Quality Initiative, all buyers using conventional or USDA funding will have their credit run twice. Credit reports will be run first at the time of application, and now a second time 5 days before closing.
When this last credit report is run lenders will be looking for several items:
- That the borrower has not established additional debt
- Balances on existing debts have not increased
- Monthly payment amounts have not increased
If any of the above factors deviate from the original credit report, the borrower’s credit scores could be affected. Steps must be taken to ensure that the changes do not disqualify the borrower from the loan product.
All banks and lenders are required by Fannie Mae to ensure detection of borrowers undisclosed liabilities. This means that all consumers using any conventional or USDA loan product are subject to this guideline from all the banks, no matter who they are getting their loan from. Consumers need to be well versed in all new and existing loan guidelines to aid them in complete compliance.
The excitement of new home ownership typically spurs homeowners to run out and purchase new appliances, window treatments, furniture etc. Many of these items can be quite costly. With these new guidelines in place, it is safer to wait until after closing to make such large purchases. By waiting, you have insured that nothing can affect your credit score in a negative way.
Related posts:
About Angela Kraushaar
