That is right, you read it correctly... Fannie Mae, the governmental agency that supplies most of the new mortgage money for new home loans is now requiring lenders to check borrower's credit at the time of loan application AND then again just before the loan closes. The new requirement is basically to insure, you the borrower's credit score has not gone down or your qualifing ratios become too tight to qualify for the loan. In many cases checking credit for the second time will actually prevent the loan from closing. Yes, many more buyers who thought they would be able to buy will find out they are not approved for their loan just before their expected closing.
To prevent a surprise from happening at your closing it is best to simply STOP or greatly reduce obtaining new credit during your home loan processing period. You do not want to be opening new credit card accounts, increasing balance in existing lines of credit, co-signing loans for anyone else or even increasing your credit card balances. Depending on your credit score and income to debt ratios, using more credit during your loan processing period could either cause you to pay a higher interest rate for your loan than what was originally quoted or totally prevent the lender from making you a loan all together.
To prevent a surprise from happening at your closing it is best to simply STOP or greatly reduce obtaining new credit during your home loan processing period. You do not want to be opening new credit card accounts, increasing balance in existing lines of credit, co-signing loans for anyone else or even increasing your credit card balances. Depending on your credit score and income to debt ratios, using more credit during your loan processing period could either cause you to pay a higher interest rate for your loan than what was originally quoted or totally prevent the lender from making you a loan all together.
In order to also further reduce lender and borrower fraud, Fannie Mae will also be requiring additional verificaton of borrower intent of occupancy. Simply put, the rules are beoming more strict and many unsuspecting borrowers will find they can not close on the home they selected. And remember, your prepaid appraisal fee and home inspection fee will not be refuned if you are turned down for financing because you credit score or debt to income ratios happen to change between the time you applied for the loan and the date of closing.
Be sure you discuss this new rule with your broker before you do anything that will increase your use of credit while your new home loan is being processed.
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