Buying a Home? Watch Out!

So here you are a few days before settlement -the movers are scheduled, the utilities switched over in your name and the post office has the order to forward your mail – a call comes in from your lender: OOPS!  Your loan is not approved and that gorgeous home that you and your agent negotiated so hard to get at an awesome price slips away. . .

Unfortunately, this scenario will become more common with Fannie Mae’s new Loan Quality Initiative that requires lenders to run a borrower’s credit score a second time a few days before closing along with other last minute verifications before final loan approval is granted.  If there’s been a dip in the credit score (perhaps the borrower took out a new credit card) the lender will be required to delay closing, ask for more down payment, increase the interest rate, or at the worst – cancel the closing.

Many lenders have already been running these last minute verifications – the difference now is that Fannie Mae requires that all lenders do so.

Here are 7 tips for consumers who are in the process of buying a home and want to settle on time:

1. Don’t change your employement status

2. Don’t make major purchases (car, furniture, home theater, vacations, etc.)

3. Don’t increase your credit card debt or miss any payments

4. Don’t change bank accounts or make undisclosed large deposits

5. Don’t apply for a credit card, co-sign a loan, or make a credit inquiry

6. Don’t spend money you have set aside for closing – not any, not ever

7. Don’t delay in providing all paperwork asked for by the mortgage company