A new rule (Fannie) called Loan Quality Initiative went into effect on July 1, 2010 that requires lenders, BEFORE CLOSING, to check credit to make sure borrowers have not incurred any new debts. If borrowers incur MORE debt, and it affects the underwriting ratios by more than 2%, the loan will have to be re-underwritten prior to closing.
Consider "Coaching" Your Clients with some Old School Advice!
Don't - Allow multiple credit checks
Don't - Apply for new credit within 45 days of signing a contract
Don't - "Shop" for new credit before closing (Furniture, cars, etc)
Don't - Go on a spending spree (using your credit limits) to buy things for your new home.
Do - File tax returns and/or extensions
Do - Explain or documents all inquiries on your credit report
Do - Disclose all Debt-even if it did not show up on your credit report
Do - Work with a knowledgeable lender
Just a few tips to avoid surprises, or worse yet, a rejected loan just days before closing!
Michael Reeve
Vice President, Residential Lending
First Bexley Bank
614-682-5252 Office
614-899-0361 Fax
614-354-1277 cell
FBB Mortgage Loan Group: 2641 Oakstone Drive, Columbus, Ohio 43231
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