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New account during Loan process.

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Anonymous
Not applicable

New account during Loan process.

My wife and I are in the process of buying our first house. We've been pre-approved and have an offer in are under contract for the house we want. Also, when our credit was pulled at the beginning of the month (May) we clocked in at 700 score according to the lender's criteria. All that being said, I did the SP BB&T card approval and app process back in late April and figured it would be ok; especially since I wouldn't put a balance on the card before we closed.

Now I'm thinking the above might not have been the best idea as the general advice is that you should do nothing that could change your report before closing. However, we are due to close around the end of June, our DTI is at 12%, and one of my cards just awarded a CLI that will report tomorrow. I've read that really the most important thing to mortgage lenders, compared to INQs or HPs, is DTI so with that in mind I don't see an issue.

 

I should be fine especially since there is a chance the account may not even show up before close but wanted to get some other eyes on the situation to see what you all thought.

 

Edit: Update offer status

17 REPLIES 17
Anonymous
Not applicable

Re: New account during Loan process.

Im not much help! But were in same boat w closing on our first house end of June!
I think it should be fine if you haven’t added debt. Id call your LO & ask. We ask ours everything lol. & GL!!
Message 2 of 18
Mortgage-Specialist
Established Contributor

Re: New account during Loan process.

Underwriting always does a soft credit pull a day or 2 before closing. They will see that your credit was pulled. Not a big deal though. It would be best for you to notify your loan officer now so they can get a credit supplement. This means your lender's credit vendor will contact your credit card company and get a verbal from them that there is no new balance or monthly payment.
Message 3 of 18
Anonymous
Not applicable

Re: New account during Loan process.

I thought they could not see other soft pulls? Additionally, I think I should clarify that they already have/will have documentation and proof of where our down payment is from, including bank statements. In effect, the "cannot borrow for owner equity" clause will be moot. Of course correct me if i'm wrong but I was wondering if there were any other reasons for new accounts to make them nervous.

Also see https://ficoforums.myfico.com/t5/General-Credit-Topics/Soft-pull-see-other-soft-pulls/td-p/5142126 related to soft pull visibility by other creditors. With that, I'm concluding if the account doesn't even show up before close it doesn't matter. However, if it does our down payment is already accounted for so the worst that could happen is they ask for the balance which will be $0.

And to be clear, this new account will be the result of a Soft pull only not a Hard pull.

Message 4 of 18
Mortgage-Specialist
Established Contributor

Re: New account during Loan process.

You mentioned BB&T pulled your credit for credit card purposes. Usually hard pulls are done in that instance. If they did in fact do a soft pull, then underwriting would not see it at close.
Message 5 of 18
VALoanMaster
Valued Contributor

Re: New account during Loan process.


@Anonymous wrote:

I thought they could not see other soft pulls? Additionally, I think I should clarify that they already have/will have documentation and proof of where our down payment is from, including bank statements. In effect, the "cannot borrow for owner equity" clause will be moot. Of course correct me if i'm wrong but I was wondering if there were any other reasons for new accounts to make them nervous.

Also see https://ficoforums.myfico.com/t5/General-Credit-Topics/Soft-pull-see-other-soft-pulls/td-p/5142126 related to soft pull visibility by other creditors. With that, I'm concluding if the account doesn't even show up before close it doesn't matter. However, if it does our down payment is already accounted for so the worst that could happen is they ask for the balance which will be $0.

And to be clear, this new account will be the result of a Soft pull only not a Hard pull.


Just a heads up. Not disclosing debt can be considered mortgage fraud so whether or not it shows up on your credit report is irrelevant. You are required to disclose it.

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.
Message 6 of 18
Anonymous
Not applicable

Re: New account during Loan process.

I'm pretty sure $0 balance accounts are not considered debt. I don't think there's precedent for that either but thanks for the headsup. Mainly referencing this post https://ficoforums.myfico.com/t5/Mortgage-Loans/0-balance-credit-cards-included-in-debt-calculations... . Further, the account isn't even open yet as I have not received a card in the mail so, technically, there is nothing to disclose as yet. Guess, I will request to read the overlay documents to be sure.

Message 7 of 18
JVille
Valued Contributor

Re: New account during Loan process.

The account is open and at the very least this can stop your Documents from being drawn because Underwriting will want a letter of explanation regarding the new credit line and will need the letter approved And the credit bureau to update the credit report to reflect a zero balance.
They WILL see you applied for additional credit, that is the whole purpose of this last minute credit pull.
I would notify your LO immediately and head off a last minute delay. The system is designed to look for undisclosed debt! You may not owe anything but you applied for additional credit.
Message 8 of 18
Anonymous
Not applicable

Re: New account during Loan process.

Spoke to LO and they said it's not a big deal. Apparently they have contacts at the bank in question anyway so it would be an easy problem to solve for them in terms of re-calculations. Which they could do even it did manage to have a balance on it. So far so good.

 

Also, they said since I don't have an account number and it's not showing up on the report there is nothing for me to do or be worried about at this time.

Message 9 of 18
JVille
Valued Contributor

Re: New account during Loan process.

“At this time”
Message 10 of 18
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