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Fannie Mae has implemented a new policy which will go into effect on June 1, lenders are responsible for certifying that the borrower's monthly obligations have not increased from the time of when credit was initially pulled through the closing date. This is effective for new conventional applications only and is not applicable for VA, FHA or Rural Development loans at this time but traditionally they will soon follow.
The goal is to reduce the number of loans that default because of new, non-disclosed debt. Lenders have the freedom to verify in whatever manner they wish, but in most cases, the verification process will amount to a credit re-pull made just prior to closing. A credit report will be pulled at the beginning of the application and will also be pulled 5 days prior to closing.
What does this mean for you, the borrower? It means that you absolutely should not take out any additional credit or even have an inquiry into your credit report from the time you start the loan application until after you close.
Tips to Avoid Last Minute Issues
DO NOT-
• Take out any new credit during your loan application – wait until your loan has closed
• This means no furniture shopping, new window treatments and especially no “Buy now –Pay later” type of financing
• Use your line-of-credit to purchase anything
• Make any large purchases using your credit cards
• Co-sign on a loan for anyone else
• Pay for the mover upfront – ask to be billed later
• Go car shopping even if not ready to buy yet – the dealer may pull your credit that will result in an additional inquiry
• Add to your current debt load as of application time until after closing
• Pay late on any obligation DO:
• Create paper trails for all deposits into your asset accounts
• Be prepared to write letters of explanations for anything out of the ordinary, e.g.: -For inquiries into your credit report – for any reason – over the last 90 days -For any derogatory credit issues -For any employment gaps
• Speak with your loan officer if you have any questions regarding any of this information
Have you received a Notice of Default on your property? What are your plans? Do you plan to walk away or do you want to try a Short Sale which has much less damage to your credit and helps you save face? You need a plan of action and if you want to buy some time, stay in the home until it sells and save up some money - then contact:
Kathleen Lordbock REALTOR/Staging & Short Sale Specialist
Keller Williams Realty Brainerd Lakes
Don't just walk away - there is hope, there is help!
Fannie Mae has implemented a new policy which will go into effect on June 1, lenders are responsible for certifying that the borrower's monthly obligations have not increased from the time of when credit was initially pulled through the closing date. This is effective for new conventional applications only and is not applicable for VA, FHA or Rural Development loans at this time but traditionally they will soon follow.
The goal is to reduce the number of loans that default because of new, non-disclosed debt. Lenders have the freedom to verify in whatever manner they wish, but in most cases, the verification process will amount to a credit re-pull made just prior to closing. A credit report will be pulled at the beginning of the application and will also be pulled 5 days prior to closing.
What does this mean for you, the borrower? It means that you absolutely should not take out any additional credit or even have an inquiry into your credit report from the time you start the loan application until after you close.
Tips to Avoid Last Minute Issues
DO NOT-
• Take out any new credit during your loan application – wait until your loan has closed
• This means no furniture shopping, new window treatments and especially no “Buy now –Pay later” type of financing
• Use your line-of-credit to purchase anything
• Make any large purchases using your credit cards
• Co-sign on a loan for anyone else
• Pay for the mover upfront – ask to be billed later
• Go car shopping even if not ready to buy yet – the dealer may pull your credit that will result in an additional inquiry
• Add to your current debt load as of application time until after closing
• Pay late on any obligation DO:
• Create paper trails for all deposits into your asset accounts
• Be prepared to write letters of explanations for anything out of the ordinary, e.g.: -For inquiries into your credit report – for any reason – over the last 90 days -For any derogatory credit issues -For any employment gaps
• Speak with your loan officer if you have any questions regarding any of this information
Have you received a Notice of Default on your property? What are your plans? Do you plan to walk away or do you want to try a Short Sale which has much less damage to your credit and helps you save face? You need a plan of action and if you want to buy some time, stay in the home until it sells and save up some money - then contact:
Kathleen Lordbock REALTOR/Staging & Short Sale Specialist
Keller Williams Realty Brainerd Lakes
Don't just walk away - there is hope, there is help!
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