When having a home built, does the lender re-check or verify finances/credit/income again before closing?
Shorter Answer:
Yes, underwriters review income, assets, and credit right before closing a file to ensure that nothing has changed in the borrower's circumstances since applying.
Longer Answer:
When embarking on the exciting journey of having a home built, one of the most crucial aspects to consider is the financial process involved. A common question that arises during this process is whether the lender re-checks or verifies finances, credit, and income again before closing. The short answer is: Yes, they do. Here's why and what you need to know.
Why Lenders Re-Verify Finances Before Closing
- Ensuring Financial Stability: Lenders want to ensure that your financial situation hasn't changed significantly since the initial approval. This is to confirm that you are still capable of making the mortgage payments.
- Protecting Against Fraud: Re-verifying finances helps protect both the lender and the borrower from potential fraud. It ensures that all information is accurate and up-to-date.
- Compliance with Regulations: Lenders are required to comply with various regulations that mandate the verification of a borrower's ability to repay the loan. This includes a final check before closing.
What Lenders Typically Re-Check
- Credit Score: Lenders will pull your credit report again if the original report is more than 120 days old. This ensures there are no new debts or significant changes that could affect your creditworthiness.
- Income Verification: They may request recent pay stubs or other proof of income to confirm that your employment status and income level remain consistent.
- Bank Statements: Lenders might ask for updated bank statements to verify that you have the necessary funds for closing costs and reserves.
How to Prepare for Re-Verification
- Avoid Major Financial Changes: Try not to make any large purchases, take on new debt, or change jobs before closing, as these can impact your financial profile.
- Keep Documentation Ready: Have your financial documents organized and ready to provide to your lender if requested.
- Communicate with Your Lender: Stay in touch with your lender throughout the building process to understand what they might need from you before closing.
Conclusion
Re-verification of finances before closing is a standard part of the home-building process. By understanding why it's necessary and how to prepare, you can ensure a smoother path to moving into your new home. Always keep open lines of communication with your lender, avoid any significant financial changes, and be aware that your credit report will be re-pulled if it's more than 120 days old to maintain your eligibility for the mortgage
If you have other mortgages process questions, please reach out at teamjd@mainstreethl.com
These blogs are for informational purposes only. Make sure you understand the features associated with the loan program you choose, and that it meets your unique financial needs. Subject to Debt-to-Income and Underwriting requirements. This is not a credit decision or a commitment to lend. Eligibility is subject to completion of an application and verification of home ownership, occupancy, title, income, employment, credit, home value, collateral, and underwriting requirements. Not all programs are available in all areas. Offers may vary and are subject to change at any time without notice. Should you have any questions about the information provided, please contact me.
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