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Watch out for the Second Credit Check
Under the new rules your lender might be checking up on you up until the day you close – and that letter of approval may not be the last word on your loan.
Fannie Mae’s new Loan Quality Initiative, which took effect June 1, is part of the mortgage giant’s effort to improve loan quality and cut down on the kind of shoddy underwriting that helped crush the housing market, and ultimately make it unnecessary for there to be so many loan repurchases.
The new Loan Quality Initiative requires any lender that sells its mortgages to Fannie Mae to determine that borrower liabilities incurred up to, and concurrent with, closing are disclosed and evaluated in qualifying the borrower for the loan. But exactly how lenders go about doing this is up to them. In many cases, it will entail a “refreshed” credit report pulled immediately before a borrower’s closing date.
Contracts typically include a scheduled closing date. So if there’s a delay and the borrower can’t close on the assigned date, a seller may end up keeping the deposit, which is typically 5% of the purchase price,
In simple terms, do not obtain new credit or make a big purchase before closing.
Follow these tips to avoid delaying your closing. READ MORE.
This is a blog post for Real Estate Professionals, Investors, Landlord, Property Manager, and Property Management Companies. Watch out for the Second Credit Check before closing is brought to you by SimplifyEm Pay Rent Online and Property Management SoftwareYou might also want to read:
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