There have been some changes and upcoming changes regarding the re-pull of a credit report a few days before closing.
Mortgage lenders are likely to begin ordering a second full credit screening immediately before closing. This report will be designed to find out whether the borrower has obtained, or even shopped for, new debt between the date of the loan application and the closing. The added debt could render the borrower ineligible for the mortgage because they now appear unable to handle the payments without a strain on their household budget. When pulling the last minute credit report, lenders are also looking for things like new credit accounts, increased credit lines, increased balances on existing accounts, undisclosed or newly recorded liens, second mortgages, etc., anything that may have changed since the initial application that might impact the borrowers debt-to-income ratio. Fannie Mae instructions say that “lenders must determine that all debts of the borrower incurred or closed up to and concurrent with the closing” are considered in the final loan analysis.
How should home buyers and refinancer’s prepare for the credit check procedures? Follow one rule: abstinence. Between the application for a mortgage and the date of closing, resist spending. Don’t apply for new credit unless it has been discussed in advance between the borrower and lender and a green light is given.