In an effort to improve the underwriting quality of home loans delivered to mortgage financier Fannie Mae, lenders will be required to take a closer look at your debt obligations beginning next month.
Come June 1, lenders will be directed to “review and evaluate the “inquiries” section of the borrower’s credit report to determine if the borrower has received additional credit that is not reflected in the credit report or disclosed on the loan application.” (lender announcement)
“If additional credit was obtained, a verification of that debt must be provided and the borrower must be qualified with the monthly payment.”
In other words, if you applied for a mortgage and barely met the debt-to-income ratio requirements, a subsequent purchase could prove disastrous for your loan.
For example, if your DTI ratio was 44 percent and the max was 45 percent, a significant purchase made sometime during the loan process could mean you were longer qualified.
“Fannie Mae is updating the Selling Guide to require lenders to determine that all debts of the borrower incurred or closed up to and concurrent with the closing of the subject mortgage are disclosed on the final loan application and included in the qualification for the subject mortgage loan.”
“If Fannie Mae determines that any debts were not adequately disclosed on the application nor included in the debt-to-income ratio such that the loan would not have met Fannie Mae eligibility requirements, the mortgage loan will be subject to repurchase by the lender.”
Whether or not they really this enforce this rule, it’s wise to avoid any major credit purchases or new credit requests during the loan process in case anything goes wrong with your application.
If for any reason you have to re-apply elsewhere, your credit score may be lower as a result, which could prove detrimental to receiving financing.