You may or may not have heard but a recent change from Fannie and Freddie has put a requirement on lenders to "refresh" credit reports prior to closing loans. This did not come as a surprise to me as one of the biggest buyback issues lenders were facing was a result of undisclosed debt. This was usually a result of the borrower applying for credit after their mortgage was approved, i.e. opening credit accounts for furniture, appliances, or even just simply running up their credit cards fixing up their house to sell. This was a topic I wrote about months ago.
Why is this important to know? Simple.....Borrowers need to know not to make ANY changes in their credit profile once they have applied for a mortgage. They need to know that re-checks are being done and new accounts could very well kill their loan. Just the other day I had a client call me that was pre-approved and had an offer accepted - it was contingent on their house selling. He kept asking me about how much a new account at a major retailer would impact his loan, credit, and otherwise. He just had to have the huge plasma that was discounted on Black Fri and even further discounted if he opened up an account there. As I explained - that could be the most expensive $500.00 you ever saved.
Make sure your clients know that it is more important than ever to go through their credit report w/ their loan officer to ensure all credit accounts report and that they need not open any new accounts.
Below is a list of helpful tips to ensure an effortless loan process. These DOs and DON'Ts will help avoid any delays with your loan approval.
DOs
- DO continue making your mortgage or rent payments
- DO stay current on all existing accounts
- DO keep working at your current employer
- DO keep your same insurance company
- DO continue living at your current residence
- DO continue to use your credit as normal
- DO call us if you have any questions
DON'Ts
- DON'T make a major purchase (car, boat, fur, jewelry, etc.)
- DON'T apply for new credit even if you seem "pre-approved"
- DON'T open a new credit card
- DON'T transfer any balances from one account to another
- DON'T pay off charge offs without discussing with us first
- DON'T pay off collections with discussing with us first
- DON'T buy any furniture
- DON'T close any credit card account
- DON'T change bank accounts
- DON'T max out or over charge your credit card accounts
- DON'T consolidate your debt onto 1 or 2 credit cards
- DON'T take out a new loan
- DON'T start any home improvement projects
- DON'T finance any elective medical procedure
- DON'T open a new cellular phone account
- DON'T join a new fitness club
- DON'T pay off any loans or credit cards without discussing with us first
- DON'T co-sign any loans or credit cards for anyone (including family members)
If you encounter a special situation, it is best to mention it to us right away so we can help you determine the best way to achieve your goals. Communication on this topic is crucial and needs to be had with every borrower. Most of this is common sense but many times people just do not realize how easily their credit can be impacted.
Senior Mortgage Planner
Ken Land
NMLS# 108157
Cell 704-641-8363
Visit me on Facebook at Free Info for NC Realtors
Apply online at www.fairwaync.com
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