Have You Heard about the New Financial Colonscopy?

If you are in the market to purchase a new home, then you should be well aware of the new stringent mortgage approval screening put in place on February 1, 2011 by the mortgage giants - Freddie Mac and Fannie Mae. This "financial colonscopy" as one loan officer decribed it now requires lenders to dig back 120 days into credit files to investigate credit inquiries. This also includes investigating if any new credit has been established and refreshing the credit report throughout the loan process, including right up until the minutes before closing and funding.

So what does this really mean to you as a buyer. Well, if your lender should discover any new credit accounts, the new accounts could potentially impact your previously agreed upon loan terms, especially if the terms were hinging on a specific debt to income ratio or FICO score. Additionally, the mortgage giants are requiring lenders to track your credit behavior throughout the loan process up until closing and funding of your new loan.

Now more than ever it is even more important to refrain from shopping for that comfy couch or that sleek new dining room table you've had your eyes set on since your offer was accepted. Do not be lured into opening up any new credit accounts to make any purchases whether how small you think they are. Better yet, also refrain from utilizing all current credit accounts to make any purchases. The best plan is to only purchase items if you have ample cash available to purchase these items outright and still maintain the required funds required to be held in cash reserve for your specific type of loan.

So your best bet to ensure no hiccups is to not buy anything for your new house until you have signed the mound of closing paperwork and you've heard these words that are worth a million dollars from the escrow officer at the title company, "we have funded your loan, you can now pick up your keys." Failure to do this could put you in a very difficult situation with the seller and would put you in a position to have many new items for your new home and no home to place them in!