We are often cautioned by our mortgage broker and/or lender to not charge up our credit cards, change jobs or make a big purchase, such as an automobile just before we close on a home loan. This advice now seems more prudent than ever!
On June 1, 2010, Fannie Mae (the government sponsored company that establishes the underwriting standards for most of the nation's mortgages) has started requiring lenders to recheck a borrower's finances shortly before closing their home loan. If significant changes in a Buyer's financial situation are detected, the funding of the loan may be delayed or in some cases, denied.
This is an important step to ensuring a home loan is based on the borrower's (in this case, you, the Buyer) most accurate and up to date information. Basically, a checks and balances has been put in place to verify that the borrower will be able to make his/her mortgage payments.
"If everyone does what they are supposed to do, it should not be a big problem," states Jim Pair, President of the National Association of Mortgage Brokers.
This new policy could have significant repercussions for borrowers whose credit scores were at certain thresholds, like 680 or 720, which often activate different loan terms. Just one point in a credit score can change things, and in many instances the Borrower may incur additional fees associated with the closing of their loan.
Communication is key, and if "things just come up", make sure you inform your mortgage broker and/or lender of these changes when they occur to ensure the smoothest possible close on your new home! The Borrowers most likely to have an issue with this change are the ones which try to hide things from their lender.
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