How can a fully approved loan get denied for funding after the borrower has signed loan docs? Simple! At the end of the transaction, the underwriter pulls an updated credit report to verify that there hasn't been any new activity since original approval was issued and the new findings kill the loan. This generally won't happen if closing in a 30 day time-frame, but borrowers should anticipate a new credit report being pulled if the amount of time from an original credit report to funding is more than 60 days.
To help ensure a smooth loan process, here are some credit Do's and Don'ts. These tips don't encompass everything a borrower can do prior to and after the Pre-Approval process, however they're a good representation of the things most likely to help or hurt an approval.
1. DO continue making your mortgage or rent payments
2. DO stay current on all accounts
3. DON'T make a major purchase (car, boat, big-screen TV, etc…)
4. DON'T open a new credit card
5. DON'T close any credit card accounts
6. DON'T open a new cell phone account
7. DON'T consolidate your debt onto 1 or 2 cards
8. DON'T pay off collections
9. DON'T take out a new loan
Keep in mind that the mortgage financing process has changed over the last few years and lenders have become more strict. When in doubt: Wait until AFTER the loan closes for any major purchases, loans, consolidations, and new accounts & ALWAYS consult with your loan professional regarding advice and the strategy for closing your loan.
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