Financing in Seattle>Question Details

Jaclyn, Renter in Little Elm, TX

do they pull credit day of home closing?

Asked by Jaclyn, Little Elm, TX Wed May 30, 2012

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It has become the norm for most lenders to pull credit just prior to closing to make sure your financial situation has not changed. Buyers have lost their loans from running out and charging thousands of dollars worth of new furniture, appliances etc...before they got to the closing table.
2 votes Thank Flag Link Wed May 30, 2012
One Question, I have final approval from one bank with down payment condition . Bank is taking long to get mortgage contract signed not sure why it is taking long. I have another bank option can I apply in other bank and in case first bank confirms I will withdraw my application from second bank.

My doubt is if First bank do credit check again before closing and my points are less and it shows I have applied for mortgage in other bank after its approval does it affects my application.
Flag Wed Jul 13, 2016
Everyone is right. Don't try to buy things on credit while you are in escrow. Wait until you fund and record. Then buy the new stuff.
1 vote Thank Flag Link Tue Oct 30, 2012
It is becoming more and more prevalent in today's lending world. Fannie Mae is in the midst of implementation of having credit pulled the day of closing. If there are material changes, then loan could possibly get turned down or have to be restructured. It is not being required now by Fannie, but it is just a matter of time. I tell clients, DO NOT DO A THING WITH CREDIT UNTIL AFTER THE LOAN HAS CLOSED. PERIOD.
Flag Fri Nov 9, 2012
Lenders will pull credit as the closing date approaches. Buyers should avoid creating any new debt during their real estate transaction. New debt can jeopardize your loan approval. Wait until after closing to go out and buy that leather sofa!
1 vote Thank Flag Link Wed May 30, 2012
We have been approved for a house now in escrow we found out we have to put in a new pit for our septic tank now we have to put it on a open credit card will this affect the closing on our house were close to our limit now.
0 votes Thank Flag Link Wed Jun 15, 2016
If a mortgage lender used Equifax as the credit report for the application. Will that be the report that they pull at closing?
0 votes Thank Flag Link Wed Dec 16, 2015
The worst example of this that I've seen...client had to provide insurance binder as required by lender, paid for binder on credit card, lender tanked the loan the day before closing because insurance binder on credit changed the landscape. So, client felt like "you MADE me secure the insurance with so little time that credit card was about the only way, then you cancelled my loan!!". My personal opinion in this case was that the lender was trying to get out of this loan because they had made a mistake and used this insurance/credit card charge as an excuse, so the problem wasn't their fault. But still....
0 votes Thank Flag Link Fri Nov 8, 2013
As many people here have said, yes they do pull credit prior to closing.

You could write a novel with Realtor's stories of clients buying a house full of furnishings, new car, toys and such prior to closing. I always have this talk with clients and I know lenders do as well. I advise my clients to pick out their new appliances or items, but wait until the day after they close to order them to prevent any issues with closing.
0 votes Thank Flag Link Fri Nov 8, 2013
Most lenders will pull your credit report within 3 days of closing to ensure you have not taken out new financing. I heard of a buyer who lost a $15,000 earnest money deposit because he purchased a boat 1 week before closing, and had taken out financing for the boat. The new boat payment put his debt to income ratios too high, and he was no longer able to obtain financing. Before buying anything on credit while under contract, contact your lender first.
0 votes Thank Flag Link Sat Nov 2, 2013
Lenders pull credit reports before the closing to make sure the borrower's financial situation has not changed since the loan was approved.
Any new loans on your credit report can jeopardize the closing.
0 votes Thank Flag Link Sun Oct 13, 2013
Lenders have always reserved the right to pull credit during the process of qualifying, and many times even after the loan is closed. (the infamous QC secondary review). Up until the "crisis", this was rarely done. However, since the crisis, I would guess about 75% of my deals require a new pull just before closing...
I lost a deal once, and was really disappointed to let a great family miss out on their first home purchase. Since then, I warn clients several times during the process not to obtain anything on credit, no new credit cards, no new credit inquiries. Once bitten, twice shy. No need to hurt your chances by credit issues. Wait til you are having breakfast in your new home, two weeks after closing!

Best wishes, Jim
0 votes Thank Flag Link Sun Jun 3, 2012
The lender can and often does pull a credit report right around closing.
0 votes Thank Flag Link Wed May 30, 2012
Yes, lenders do check on the buyers credit just prior to closing. There should be no significant changes in your credit between the time of application and the close date. If there is, the lender can deny the loan. I always tell my buyers not to charge any new items for their new home until AFTER the closing.
Hope that helps!
Best,
Michael
0 votes Thank Flag Link Wed May 30, 2012
Yes, we pull credit prior to the loan closing. It is usually crucial that you don't acrue new credit or add purchases to existing credit accounts during a purchase or a refinance as it can drastically change your debt to income ratio and qualifying status. You should always check with your loan officer before doing anything out of the ordinary.
0 votes Thank Flag Link Wed May 30, 2012
Why is it considered "out of the ordinary" to finance furniture near to the closing date so that a human being can actually LIVE in their new house? The only things that should be scrutinized are the appearance of new vehicle loans, credit card use at a casino, or new risky lines of credit. Why the hell are people prevented from financing the furniture they're going to put into their new house? Do loan companies think that just because I've held off financing something up to closing that I'm not going to IMMEDIATELY go out and finance it after closing? It's just more stupid bureaucracy caused by the housing crisis that banks created. Talk about overreaction.
Flag Wed May 14, 2014
Yes they do.
They verify everything you put on your application before the loan is approved. Then they verify a number of things, including employment, bank balance and credit, a day or two before funding the loan (closing)
The biggest mistake buyers make is buying things on credit for their new home before closing. That could easily cost you the sale!
Phil
0 votes Thank Flag Link Wed May 30, 2012
Hi Jaclyn, yes, most lenders do a "soft pull" to check your credit. Any new inquiries or debts will need to be explained and document the new debt. This really started back in 2010 with initiatives to improve the quality of loan applications - to make sure that what is on a borrowers application actually resembles their financial scenario.

I've attached a link with more information.
0 votes Thank Flag Link Wed May 30, 2012
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