Effective Date: June 1, 2010

Effective with new borrower(s) Loan applications taken on and after June 1, 2010 lenders will now be required, under Fannie Mae's New Loan Quality Initiative, to make certain that there is no undisclosed debt right up to and through the day of closing on your new home.  This means that a borrower(s) can not have obtained any new debt from the time of initial credit report through the day of closing.  It is not necessary for the mortgage lender to obtain a new credit report prior to closing on the home in order to verify to Fannie Mae that there is no undisclosed debt.  It is important to understand, should a new credit report disclose any new debt, the lender will be required to re-underwite the loan, which could result in either a delay or even a cancellation of the loan closing.  Also, a lower FICO (credit) score could result in a price and/or rate adjustment to the borrowers loan, or worse, a loan declination of the loan.

Even any new credit inquires must be researched by a third party and verify that these inquires did no result in any new debt.

In a nut shell, if you have been qualified to obtain a mortgage and are looking to buy a home, do NOT make any significant credit card purchases until you have closed on the new home.  Do not buy a car, or even a bunch of furniture to furnish the home unless you are using only cash.  Even then, you could jeopardize your loan because you are changing your amount of cash reserves.  If you are even considering doing such a thing, I would suggest that you discuss this with your mortgage officer prior to doing so.  Please remember that your mortgage officer, like your REALTOR is an integral part of your team that assist you with the home buying process.

If you have any questions about this or any other aspects of buying a home, please feel free to contact me.