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Buying Your Home: 4 Things that Can Undo Your Real Estate Loan Approval

creditEveryone knows that when you first apply for a home loan, your credit needs to be in good shape, but did you know that what you do during the processing of your loan can have an impact too?

Lenders look at:

  • Credit balances and minimum payments
  • Credit depth (the number of accounts, with or without balances and length of time that the accounts have been open)
  • Inquiries in the past 120 days that could result in new credit
  • Judgments or liens

The credit report that’s pulled when you first apply for a real estate loan is not the only one that gets pulled.  That credit report needs to be updated after 90 days and it’s very likely that there will be a second credit check at underwriting (that’s a pretty close to closing) just to make sure that nothing has changed.

Changes that could result in the need to re-qualify for the loan, possibly creating a delay or even stop you from getting your loan:

  1. New Loans–don’t do it, don’t get any new credit while you are in the process of buying a home
  2. Increased balances on existing credit line–don’t do it, don’t use that credit line to pay for appraisals, inspections or anything else
  3. Inquiries by potential creditors–don’t do it, don’t shop for a new car, appliances, home improvement or furniture
  4. Derogatory items (reports of late payments etc.)–in this case, do it, pay it on time or early, pay the whole amount due.
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