To many overdrafts for a conventional loan?

Asked by Kat, Grand Prairie, TX Wed Sep 24, 2008

A month ago I was approved for a conventional loan. Ernest money, inspection ect has caused me to overdraft my account twice this month. Will this effect my loan application? Should I be worried?

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Jackie Pulca…, , New York
Thu Sep 25, 2008
Be prepared to explain these in detail, should the lender see the overdrafts on your bank statement. Although they will not have an impact on your credit score, it becomes a concern to a lender as to whether or not you can successfully manage your cash flow. Explain the isolated large expenses and prepare a detailed budget (just in case) to show the lender that you can handle all of your financial obligations. This is especially important if you are a first time homebuyer, who is not familiar with all of the expensed involved in homeownership.

I wish you the best of luck. Please feel free to contact me if I can be of further assistance.

Jackie Pulcano, SVP
United Mortgage Corp
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T.E. & Naima…, Agent, Dallas, TX
Wed Sep 24, 2008
If the overdraft was paid by your bank and no payments were late to creditors, it could not affect your score. If the overdraft was not paid by the bank and, for example, a credit card payment became not paid on time, then it will eventually find its way into your score. Typically, it takes a few weeks to appear.
So, if you are anticipating closing within a couple of weeks, it is very unlikely your score will be affected.
Your bank balance has been affected, though. If you claimed that you had $3,000 in the bank, for example, and now it is bouncing around zero, the lender may discover this when he verifies deposits and then will inquire where you will get funds to close with.
Lenders have the right to pull your score at any time. Typically, it is pulled by the loan officer, then later by processing, and may be pulled the day of closing or the day before at the behest of underwriting.
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Steve Fergus…, , Austin, TX
Wed Sep 24, 2008

Every lender will check your credit almost every time before closing now, however an overdraft has no effect on your credit. I don't know that you should worry unless they ask for an updated bank statement. Are you just about to close or are you just starting the process? Every lender is different so this may or may not affect you. When you get a chance let me know where you are in the process so I can get you a more detailed answer. Sorry I could not be more helpful but there are many factors to consider when answering this question.

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Kat, Home Buyer, Grand Prairie, TX
Wed Sep 24, 2008
he already told us that he would be running our credit again.
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James Downing, Agent, Dunedin, FL
Wed Sep 24, 2008
Often lenders only run your credit at the beginning of the lending process. Sometimes they do run it a second time. I would be extra careful and if they do notice these issues; be prepared to give them an answer as to why.
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