Fannie Mae

Buying a House? Last Minute Credit Checks Can Pose a Problem

For all intents and purposes, it’s pretty much common knowledge that if you are in the market to purchase a home, it’s best to refrain from making large purchases, applying for credit cards, or do anything that may affect your credit score. Lenders want to make sure that you will be good for the purchase, and to ensure this,  they canrun an extra credit check, just prior to a closing. For lenders operating under Fannie Mae, it’s a rule recently inacted since earlier this year.

Ironically, this can be an issue for both the buyer and the lender – in an effort to confirm that a prospective buyer is financially stable, the additional credit check can uncover a new, short-term debt (i.e., unexpected medical bills that will be covered by insurance) that will take down a viable sale.

In a recent development, Fannie Mae recently announced that it is reviewing their  rule about secondary credit checks. Another part of the rule allows Fannie Mae to require lenders to buy back defaulted loans – even up to two years after closing – should there be evidence of undisclosed debt prior to the closing. Should the rule be done away with, or modified, it could mean more sales, and a bigger boost to the real estate economy.

Information for this article provided courtesy of Information, Inc.