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Last Minute Credit Reports Can Kill A Deal

I think we all know, if you are in escrow to buy a Glendale Home, don’t go out and buy a yacht or polo pony on credit.

But, as of June 1, 2010, you could lose your financing at the eleventh hour if you apply for credit to buy furniture or appliances.  This is because Fannie Mae, the mortgage giant, will require all lenders to pull a last minute, full credit to report, to see if you have obtained- or even shopped for- new credit since you applied for the loan.

If they discover anything your loan could be put on hold until the lender has completed research on the changes to determine if your new, or potential, debt load has changed.

Let’s say you go shopping for new appliances.  The sales person tells you about a great “no payments for 60 days” loan.  You apply for it, get approval, but then decide to pay cash instead.  This bit of activity can delay closing your escrow while your lender does their research.

What is our take away from this bit of news?

  1. Don’t buy anything on credit until after the home closes escrow
  2. Don’t even apply for credit until after the home closes escrow
  3. If you must buy appliances or furniture before the close, submit the new credit information to your lender well in advance of your closing
    1. Prepare for a delay in closing anyway

It is my humble opinion, Chilluns, that these new rules (there are other things the lenders will need to recheck a the last moment) will tack on at few days to the close of even the cleanest of deals.  Be prepared for this on the front end and negotiate your deals accordingly.  To be forewarned is to be forearmed.

About Kendyl Young

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