Credit Reports and More Credit Reports

Be on your best behavior, mind your manners; however your mother told you to stay in check when company was coming over is how you need to conduct yourself with your underwriter during the mortgage loan process.

In this grown-up circumstance, you’ve got to walk the straight and narrow as far as your spending before, during, and after your credit report is pulled. Getting the loan approval is not license to “charge it!” It is just the beginning of demonstrating a consistent profile and remaining in the good risk category.

New reports do get pulled prior to closing and do impact when and if you close

New reports do get pulled prior to closing and do impact when and if you close. And even small changes in those new credit reports could wreak havoc on closings.  Fannie Mae has yet another updated policy notification about what is done if the lender obtains a new credit report and discovers additional debt.

The thing is, there’s no grace period with new debt…it gets toted up on the big mortgage fitness board and will set off all the bells. The software program (used by many lenders) that basically determines your fate (Desktop Underwriter) will get a second chance to review your vital statistics if any changes do come to light.

According to Fannie Mae’s Loan Quality Initiative; and I quote:

“Examples of situations in which loan case files should be resubmitted to DU (Desktop Underwriter:

If additional debt has been incurred and the inclusion of the additional debt would increase the total expense ratio to a level outside the tolerance specified in section B3-2-10…

If new derogatory information is detected and/or the credit score has materially changed.”

The translation is this: measure for the flat screen now, but don’t even think about it until you’re closed and you have the feel for all your newly incurred expenses.

At the end of the day…well, that’s when you can put your feet up and reach for the remote.

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