Put The Credit Cards Away!!

Caution Chicago First Time Home Buyers!!

One of the first things I tell all of my clients whether they are a first time home buyer or looking to refinance is, “Do not buy anything on credit or use your credit cards until your loan has closed and funded.” The reason for this stems from a past client who decided to buy a new car during the finance process. Now mind you this was not a new car that was bought out of necessity but a nice new Lexus that was bought because they liked it. Lo and behold we got to a couple days prior to closing and the lender re-pulled the borrower’s credit. The new car payment wound up putting the borrower’s debt ratio too high which in turn caused the borrower not to qualify for the loan.

Enter the Fannie Mae Loan Quality Initiative for applications starting June 1st. The new Fannie Mae guideline will require a  new credit report to be pulled prior to closing/funding. The lender is required to check to see if any debt or obligations have been added. If new obligations show up on the new credit report or the current obligations have increased some lenders may require the file to go back to underwriting for review. What this means is to you the borrower is potential delays. If the home you are buying is a short sale then you could lose out on your earnest money. Just the fact that your file could go back to underwriting will cause delays and possibly cause your file to be declined. So Chicago first time home buyers should think twice before buying new furniture for their new home prior to closing.

If you have any questions about financing the purchase of a new home or the refinance of your current home please fill out the form below and you will be contacted within 24 hours.