Over the last few months, I've noticed that the automated underwriting systems are making changes!!! Not always good ones either! There are some rules you need to make sure you follow when you are looking at buying a home or even refinancing! Some are basic, almost common sense, but there are others you wouldn't think of.
Basic rules to make sure you remember –
- Don't buy anything that you need to take a loan out for – such as a car!
- Don't make large deposits into your bank account without letting your loan officer know. We have to be able to verify the deposit and you don't want it to affect your available money for closing.
- Don't change jobs.
- Don't forget to pay your bills.
- Don't close any of your credit cards – especially those with balances.
Some of these are easy, but others you may not think would affect your approval – such as a large deposit into your bank account. We have to be able to verify all the money used in your transaction. If we can't verify it, we can't use it.
The other more hidden things are changes to underwriting systems. I have a borrower that we were able to get a conventional approval last summer with no problems. It expired and I had to pull a new credit report. The credit scores are the same, the debt to income ratios are the same, but there were updates to Fannie Mae and Freddie Mac this fall (in November). There was something in that update that caused this approval to change to a refer (denial). We have tried all kinds of tricks to get it to go and it doesn't. I can get an FHA approval for him so he is still ok, but not the same program.
Other situation was a VA loan, again great ratios but limited credit. We had to lower the amount he could borrow in order to get an approval.
So for those of you that have limited credit, you want to make sure you do not close any accounts. If you are thinking about buying and have 1-3 tradelines, you may want to open an account and continue to build your credit before you buy a home. The borrowers that are having more issues lately are those with limited credit and very low down payments.
Talk to your loan officer or feel free to call me with questions. We can pull your credit report and get an idea of what you can and can't do. That way when you are ready to buy, you will be prepared! If you have an approval and haven't talked to your loan officer in awhile, you may want to check in and make sure everything is still up to date!