Effective June 1, 2010 Fannie Mae has instructed lenders that they should adopt a new policy that could involve a second review of an applicant's credit report just prior to closing. When reviewing defaulted loan files, they have determined that the credit profile of a borrower may have changed from the time of the initial review of the credit report and at the time of closing.
The potential impact to a borrower who has utilized credit to make significant purchases after the initial credit report could include a delay in closing, increase of closing costs and/or interest rate or a decreased loan amount. In the worst case scenario, it could even result in a loan being denied, even after an original approval had been granted.
In order to eliminate any possibility of potential problems before closing, anyone in the application process should use credit sparingly and make sure they adhere to the tips provided below by credit expert, Linda Ferrari of Credit Resource Corp.
I would encourage you to click on Linda's name or Company link, but her advice found on her website is for those who are NOT in the middle of getting a mortgage loan! I strongly recommend the following 5 tips for those who HAVE made their mortgage application.
For more tips on what you should not do regarding credit during the mortgage application process, contact me.
Top 5 Tips for Preserving Your Credit and Mortgage Application
- Don't do anything that causes a red flag to be raised by the scoring system.
- Don't apply for new credit of any kind.
- Don't pay off collections or charge offs.
- Don't max out or over charge on your credit accounts.
- Don't consolidate your debt onto one or two credit cards.
