Looking to purchase a home in the near future?
Then you need to know beginning June 1, 2011, Fannie Mae is requiring lenders to keep a closer watch on conventional loan borrowers during the loan application process. New FNMA’s guidelines require lenders to pull applicants credit reports at the start of the loan application and again 5 days prior to closing. At this time the policy just affects conventional loan applications, but may be extended to VA, FHA and Rural Development loans later. The goal is to reduce the number of loan defaults caused by borrowers adding new debt and increasing their debt to income ratio above Fannie Mae guidelines prior to closing.
Borrowers can help avoid last minute questions or problems with their loan closing by not adding new debt, lines of credit or co-signing for someone on a loan. Even credit inquiries can raise a red flag if they occur during the loan application process. So wait until after closing to go shopping for furniture or any other large purchase, even if it’s buy now and pay later financing. Just using your credit card to hold your move date with the movers or to book next year’s vacation can raise a flag. Emergencies can come up and you may have no choice, but let your loan officer know immediately and be prepared to provide a written explanation.
Finally, make sure you understand your lender’s loan processing procedures. To have a successful on time closing you need to understand what needs to be done and any deadlines that must be met. Be pro-active, ask questions and stay in touch with your loan officer and realtor on a weekly basis or more often if necessary. (With everyone’s busy schedule, email updates are a great way to keep in touch and to document the loan process.) If there are times of stress, just remember your goal and ours is to move you into your new home.