Second credit screening could delay closing or kill the deal
Want further proof that it's a bad idea to open a new line of credit while trying to buy a house?
Beginning June 1 your lender will likely be pulling a last-minute second credit report immediately before closing. If you've taken out a new loan that's large enough to affect your debt-to-income ratio calculations used in the original mortgage approval, your deal could fall through.
Opening a new line of credit – whether for new furnishings, landscaping, appliances, a new credit card, etc. – is one of the top homebuyer mistakes to avoid.
From the Washington Post:
The June 1 changes are part of a new effort by mortgage giant Fannie Mae to cut down on slipshod underwriting by lenders and fraud by borrowers. Fannie's "loan quality initiative" will require lenders not only to pull two credit reports for each mortgage transaction but to perform additional verifications of borrower occupancy plans for the property, Social Security numbers and Individual Taxpayer Identification Numbers.
The story appeared in last Saturday's edition. Read the full article.