Lenders continue to tighten their rules and the latest salvo is that a credit report, which for years has had an expiration date of 120 days from the time it was pulled until the loan recorded has now been shortened to 90 days.
What can that mean for home buyers?
If they get pre-approved too soon, before they are ready to make an offer, they are going to be looking at their lender pulling a credit report mid-way through their transaction.
That means:
More credit report fees charged to the buyer
That could mean:
The borrower's approval status could change and they could end up being denied if their credit score fell below their loan program's threshold or a derogatory item appeared on the new report that did not appear on the old one.
The borrower's loan terms could change. If the loan's interest rate was locked assuming a certain credit score and the new score is lower, the buyer could find themselves paying either more fees (points or partial points) and/or even see their interest rate go higher.
Fannie Mae and Freddie Mac set specific credit thresholds for loan pricing and if the new credit score pushes the buyer into a new box in the pricing matrix, the buyer is no longer going to be able to obtain the original terms of the loan they locked because their terms have changed that the pricing was based on.
This is going to be a new "surprise" for some and come up right in the middle or the home stretch of the home purchase transaction.
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