If you are planning on buying a home in the future, you need to know about Loan Quality Initiative (LQI). Currently LQI only applies to convention loans but Bruce Woodburn, Summit Home Mortgage expects to see this applied industry wide in the future. LQI is from Fannie Mae and as of June 1, 2010, homebuyer’s mortgages must be based on “refreshed” credit reports or they may be cancelled and, in some states, deposits may be forfeited. I’ve been told this is a soft credit report pull that will not show up as a credit check and therefore have no impact on your score. If charges or balances are over 2% different from when your lender pulled your credit previously then a “hard” credit report is required per Woodburn.
Effectively the buyer is not officially approved for the mortgage until the results of the second credit report are approved. Buyers SHOULD NOT change credit limits (up or down), make large purchases, close or open any credit cards/lines, or change their credit spending habits, etc. says Woodburn. If there are any changes, closing could be delayed, interest rate increased, larger down payment required, closing may even be canceled or buyer could lose their deposit, in some states. Don’t let this happen to you.
Side note related to frequent “hard” credit report inquiries that may have an effect on a buyer’s credit score. For listings that require a specific bank pre-qualification, the team at Summit Home Mortgage is willing to, with buyer’s permission, share the credit report results so the buyer will not have incur multiple credit inquiries. Summit Home Mortgage can be reached at 407.869.8830 or firstname.lastname@example.org.