When folks start seriously looking to buy a home in the Page Lake Powell area, one thing I key them in on is Their Credit! Now, more than ever, it is critical for Lake Powell Home buyers, or owners wanting to refinance, to not assume any extra debt during the buying/refinancing process.
This includes, but is not limited to: opening new credit cards; applying for any type of credit though a lending institution; a car loan; a loan for new furniture; a medical expense credit card like Care One; credit for electronics ie. big screen TV or appliances for the new home…. and the list goes on. Don’t Do IT!
On June 1, 2010 Fannie Mae is requiring that all lenders verify the borrower has taken on no new debt during the application / loan process. If new debt is found, the loan may have to go through the underwriting process or be denied all together. In other words, a loan is really not approved, until it is funded!
The idea here from the lenders side is to slow down the number of loans that go bad. Therefore, new Fannie Mae regulations require the lender verifiy no new debt has been taken since initial approval. Usually this will be accomplished by pulling the credit of the borrower, right prior to closing.
Underwriters will be looking for three most common things
- Credit cards, debt and minimum payments. These new numbers will replace the numbers on the original application process. If the numbers have changed, and there is more debt, the buyer may not qualify for the loan, now at this final phase.
- The FICO score will be evaluated. If the FICO has dropped not only could the loan be rewritten at a higher cost, it could be denied.
- The Credit Inquiry Section will be evaluated as well. The goal is to see if the buyer has been applying for credit elsewhere.
Bottom line, the federally backed loan programs are attempting to slow down the amount of loans that go bad by eliminating undisclosed debt during the loan process. Now, more than ever, buyers need to keep careful watch over their credit during the buying process.