Realtors and Mortgage lenders have always advised homebuyers to refrain from applying for consumer credit once the home buying process has started, but effective June 1st 2010, new Fannie Mae rules require mortgage lenders to order a new full credit screening immediately before closing.
The pre-closing screening insures that the homebuyer has not obtained or tried to obtain new credit that might adversely affect their debt to income ratios and their ability to repay the mortgage debt that they are about to assume. If the prescreening reveals new credit lines of any kind including auto loans, home equity lines of credit, furniture loans, new appliance purchases, new credit cards or additional credit applications or purchases of any kind, it's possible that the closing will be delayed or possibly cancelled until the lender can further research the items found by the pre-closing screening.
If the new credit affects the borrowers debt to income ratio used to calculate eligibility for the mortgage, the buyer may no longer qualify for the loan placing the home purchase in jeopardy and possibly creating a breach of contract on the part of the home-buyer.
These new rules make it even more important for homebuyers to resist the urge to shop for new furnishings or any other kind of consumer credit prior to closing on a new home. Want to be sure you have the right guidance when purchasing a Chapel Hill, Durham or Raleigh area home? Contact me...I can help.
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