Closing on a Home? Follow These Tips.

Now is a good time to purchase a home because both prices and mortgage rates are low. Effective June 1, however, Fannie Mae implemented what it calls the Loan Quality Initiative (LQI). LQI is intended to make sure that mortgage loans purchased by Fannie Mae are in compliance with its underwriting requirements. Homeowners should be aware that LQI calls for mortgage companies to double-check a consumer’s financial information just prior to closing. This means that changes in a person’s finances could compel a mortgage company to delay or reject the loan even if it had been approved a month or two ago. Prior to closing on their new home, consumers should avoid acquiring any new credit. This means attempting to get new credit cards, a car loan, or other form of credit. Credit report inquiries and any new debt would appear on a consumer’s credit report when the mortgage broker reexamines the report prior to closing. Consumers should also avoid charging up existing credit, such as by purchasing new furniture on credit. In addition, it is important not to change jobs or income levels until after the purchase has been finalized. Any loss of income before closing will boost the debt-to-income ratio and could result in an adverse credit decision. Any other actions that could damage a person’s credit score should be avoided as well, such as missing credit card payment or other bills. | Read More