Buyers Under Contract – Careful What You Shop For!

Buyers under contract know (or *should* know) not to run out and buy a car once you’re under contract on a home, but the scrutiny is about to get a lot higher as of June 1, 2010:

Beginning June 1, your lender is likely to order a second full credit screening immediately before closing.

The last-minute credit report will be designed to find out whether you have obtained — or even shopped for — new debt between the date of your loan application and the closing. If you’ve made applications for credit of any type — for furnishings and appliances for the new house, a car, landscaping, a home equity line, a new credit card, you name it — the closing could be put on hold pending additional research by the lender.

It’s all part of a new effort by Fannie Mae to cut down on sloppy underwriting and borrower fraud. Even if everything turns out to be okay, lenders are required to make inquiries, which may hold up your closing.

So buyers: RESIST the urge to open up a new credit card account, even if it’s to ‘save 10% on today’s purchases.’ AFTER settlement, spend all you want.

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