Fannie Mae has implemented a policy that will affect what you buy during escrow. Since most lenders use Fannie Mae guidelines, you need to be aware of this policy.

Lenders are responsible for certifying the borrower’s monthly obligations have not increased from the time of the initial credit report through the closing date.

What does this mean to you? This means that most lenders will re-pull your credit just prior to closing escrow. Scary? A little. Here are some tips on what to avoid from mortgage broker Lester Wilkins:

DON’T:

• Take out any new credit during your loan application – wait until your loan has closed.
• Buy furniture or electronics using “Buy now –Pay later” type of financing.
• Use your line-of-credit to purchase anything.
• Make any large purchases using your credit cards.
• Co-sign on a loan for anyone else.
• Pay for the mover upfront – ask to be billed later.
• Go car shopping even if not ready to buy yet – the dealer may pull your credit that will result in an additional inquiry.
• Add to your current debt load as of application time until after closing.
• Pay late on any obligation

Do:

• Create paper trails for all deposits into your asset accounts.
• Be prepared to write letters of explanations for anything out of the ordinary, e.g.: For inquiries into your credit report – for any reason – over the last 90 days -For any derogatory credit issues -For any employment gaps.
• Speak with your loan officer if you have any questions regarding any of this information.

Have you noticed that glaring hole in this policy? There’s nothing that prohibits you from doing each and every one of these things the day after the close of escrow.  Anyone can be responsible for 30 days; it’s the next 30 years the lender should be concerned about. This is typical bureaucratic logic, but these are the rules we need to play by. If you need a lender to speak to, please contact me.