Home Buying in 01730>Question Details

Ambgmb, Home Buyer in 01730

is it legal to force a buyer to close a credit card if FICO score is 720?

Asked by Ambgmb, 01730 Wed Oct 5, 2011

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They cannot force you too but they can give you the options below:

1. Pay off the card and get the loan.
2. Don't pay the card off and don't get the loan.

Unfortunately there is not a whole lot of flexability when it comes to Debt to income exceeding guidelines.

Some other ways you can explore to get your DTI in line with guidelines:

1. If you have MI look at a single premium option rather than monthly, it could get your ratio in line but will cost more upfront.
2. Instead of paying off the credit card look at buying down the rate or getting a seller concession to buy down the rate.
3. Opt for an Adjustable rate mortgage over a fixed rate
4. Opt FHA financing over Conventional
5. Explore a freddie mac approval rather than Fannie Mae (Freddie mac does not have a hard and fast 45% DTI so Sometimes a loan that cannot be sold to Fannie Mae can be sold to Freddie mac. Of course you have to be working with a lender that has that option available to them.

Those are just a couple of option I can think of real quick
2 votes Thank Flag Link Wed Oct 5, 2011
Just as it would be legal for me to tell you to do 100 push ups and I will lend you $100, it's legal for a lender to require that you not only pay off the credit card, but close it as well as a condition of financing.
Web Reference: http://WeFixRates.Com
1 vote Thank Flag Link Wed Oct 5, 2011
They can't force you to close the card, but they can withhold the loan if you don't. Every lender has their own formulae for lending, and clearly the lender you're dealing with isn't okay with you having that "open line of credit" once you've taken on this new debit.
0 votes Thank Flag Link Thu Oct 6, 2011
Alan May, Real Estate Pro in Evanston, IL
MVP'08
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"Why?", you might ask would they require to to CLOSE the credit card.
They did not request you to pay off balance, pay off in full or anything other than CLOSE THE ACCOUNT.

It is about the credit you have access to, not what you are currently using. This is not a new thing. After granting you a loan, you could go and max out all the cards and get yourself into a mess. This is where American Express and Citibank often game the system by not revealing the credit limit and in the case of AE, there is no limit to publish.

Have your real estate professional suggest an alternative lender.
0 votes Thank Flag Link Thu Oct 6, 2011
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