Need some mortgage advice

For just about anything you want to get off your chest about credit cards.
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WildBill
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Need some mortgage advice

Postby WildBill » Sun Mar 30, 2014 8:25 am

So I'm going through the mortgage process. Went through the credit check, submitted all the required paperwork such as pay stubs, taxes, bank statements, etc. received preapproval and are now just trying to pick out a house. I figured since my credit was already pulled and soon the new mortgage will drop my scores for awhile, that now was a good time to get a Discover Card that I've been wanting to replace a Cap 1 that's never used. I have several other cards. 2 Amex and a Chase so it's not going to hurt my aaoa too much. However a friend just told me that I may have shot myself in the foot. I was told you should NEVER apply for new credit cards during a mortgage process because they can soft pull all during the process and can hard pull again right at closing and if there are changes between the first pull and the last pull, it could destroy the whole deal.

My question is, is this true? If so, would calling Discover and canceling the card before it ships to me help? I know I will still take a slight ding from the inquiry, but if I cancel it now would it prevent a new account from showing up on my CR's and will that make a difference? I'm almost sick to my stomach about this and feel dumb I didn't know this ahead of time. Any knowledgable advice would be appreciated.

Sorry, I realized I posted this in wrong area. Could a Mod move it to the appropriate place?


rockyrock
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Postby rockyrock » Sun Mar 30, 2014 8:29 am

The die is cast.

While I've never heard of lenders pulling your score twice, I guess it could happen if the process gets drawn out for too long--even then I wouldn't think so. There is pretty much nothing you can do at this point either way.

Calling Discover will not likely yield anything fruitful. The HP likely hit one or more bureaus already.
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WildBill
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Postby WildBill » Sun Mar 30, 2014 10:44 am

rockyrock wrote:The die is cast.

While I've never heard of lenders pulling your score twice, I guess it could happen if the process gets drawn out for too long--even then I wouldn't think so. There is pretty much nothing you can do at this point either way.

Calling Discover will not likely yield anything fruitful. The HP likely hit one or more bureaus already.


I was just wondering if I cancel it soon enough, can I at least prevent a new trade line/ new account from reporting? I understand there is nothing I can to about the hard pull, but that's not my worry.

linuxmachine
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Postby linuxmachine » Sun Mar 30, 2014 11:55 am

WildBill wrote:I was just wondering if I cancel it soon enough, can I at least prevent a new trade line/ new account from reporting? I understand there is nothing I can to about the hard pull, but that's not my worry.


They will usually report your account regardless of what you do. You can try calling the cc company yo see if you can close without reporting, but technically your account is open.

Also, yes, lenders do one last pull before closing as that's when they commit to your loan. They want to see if you added any extra risk to your portfolio. I don't think a new cc account will break your deal, but it might be enough to up your rates a tick. You can ask your lender/broker about this to make sure you don't get any surprise complications at the end of escrow.

The best thing you can do is to call the cc company and talk to your lender and work it out. So get to it :-)

WildBill
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Postby WildBill » Sun Mar 30, 2014 12:06 pm

Thanks. I guess I'll give my loan officer a call tomorrow to inform him I'm a dumba$$ and see if this screwed things up. It would be a damn shame to mess this mortgage up over a credit card, but that's what happens I guess when we make decisions before thinking.

MemberSince99
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Postby MemberSince99 » Sun Mar 30, 2014 3:31 pm

Unfortunately you did screw up. You should always wait until after the close if at all possible to make moves like this when in this situation. As stated what's done is done, you can't really undo it (never say never but I would not think it's likely) so yeah call him and let him know because he will find out in any case. And for Christ's sake don't do anything else until after you close unless you simply have no choice (an example would be if your car gets totaled and you simply need one to get to work). He actually should have told you this but some assume it's just obvious I would guess.

thom02099
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Postby thom02099 » Sun Mar 30, 2014 5:01 pm

WildBill wrote:Thanks. I guess I'll give my loan officer a call tomorrow to inform him I'm a dumba$$ and see if this screwed things up. It would be a damn shame to mess this mortgage up over a credit card, but that's what happens I guess when we make decisions before thinking.


This is the best course of action now. As others have said, the damage is done. And it could jeopardize your loan. I don't say that to be mean, but you need a reality check. You didn't mention your scores in all this, but depending on where you are, this could mean the difference between approval and denial, or approval with a higher required down payment. An HP such as this could result in a minor ding such as 10-15 points, or you could lose 30-40 points. At other forums, anecdotal reports are all over the place as to how many points can be lost by applying for new credit right before getting a mortgage. If your scores are in the mid 700s, probably won't have a major impact. If you're in the low 700s, could drop you from one tier to another in interest rates. If you're borderline 700s to upper 600s, this could be a deal breaker, could drop you below what they are comfortable in approving.

And in my case at least, with both getting a mortgage and getting a refi, the lender ALWAYS pulled the reports twice, once at the very beginning and once just before closing to make sure that I hadn't done something I shouldn't have. YMMV, but I've read more reports that this is the case than not.
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WildBill
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Postby WildBill » Sun Mar 30, 2014 5:35 pm

thom02099 wrote:This is the best course of action now. As others have said, the damage is done. And it could jeopardize your loan. I don't say that to be mean, but you need a reality check. You didn't mention your scores in all this, but depending on where you are, this could mean the difference between approval and denial, or approval with a higher required down payment. An HP such as this could result in a minor ding such as 10-15 points, or you could lose 30-40 points. At other forums, anecdotal reports are all over the place as to how many points can be lost by applying for new credit right before getting a mortgage. If your scores are in the mid 700s, probably won't have a major impact. If you're in the low 700s, could drop you from one tier to another in interest rates. If you're borderline 700s to upper 600s, this could be a deal breaker, could drop you below what they are comfortable in approving.

And in my case at least, with both getting a mortgage and getting a refi, the lender ALWAYS pulled the reports twice, once at the very beginning and once just before closing to make sure that I hadn't done something I shouldn't have. YMMV, but I've read more reports that this is the case than not.


I know. I really don't need to be called an idiot anymore, but I don't blame you for doing so. I knew since last year I was going to be applying for a mortgage this spring. I'm semi new to all this credit knowledge. 3 years ago I began the mortgage process and was told by a broker that I needed credit cards. According to him, I didn't have bad credit but I barely had any credit at all. Just car loans throughout my history all in good standing. I was always under the impression that credit cards were for suckers, and one shouldn't spend money one doesn't have. Apparently I was wrong. So I initially applied to Cap One as they were the only ones who would take on a credit newbie. First card was a measly $300 CL. Fast forward 6 months and Cap One gave me a rewards card with $1,000 CL. Both cards had annual fees but I was building history so I stuck with it. Turns out that broker was right, around 18 months later my score went from lower 600's to above 700. At that time I decided to try for prime cards, let them age and get rid of the subprime AF Cap Ones. I was approved for two Amex revolvers and was going to transition away from Cap One after the new ones aged a little. I also took on a Chase to keep my overall CL high. I cancelled one Cap One and goal was to cancel the other this year. A friend talked me into Discover because of the good rewards and also the exceptional US customer service and I figured hell why not. I'm not going to need credit again after this mortgage so I might as well make the moves now and then let em all age the next several years.

My thought process was to hold off until after beginning the mortgage process, but to do it before the mortgage kicked in because the huge drop in score a new mortgage produces for a time period.

Anyway, that's a glimpse inside my credit ignorant head. I pay all my bills on time, try not to spend money I don't have, but other than that I don't dwell on credit 24/7. I have 4 kids that I spend as much time with when I'm not working crazy hours at an insanely busy job. Hindsight now I see how obviously stupid what I did was. However during the process it seemed completely logical to me with no harm intended.

Bottom line, I'll find out tomorrow how bad I really screwed up. My loan officer is a stand up guy so I'd prefer to be upfront with him instead of embarrassing him with a surprise later on.

JoDa
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Postby JoDa » Sun Mar 30, 2014 6:26 pm

Don't use the card before you finalize your mortgage. Send the mortgage co. a screen shot showing a zero balance and copy of all statements as they come in (they'll request these, anyway). And do talk to the mortgage co. to make sure this won't kill the deal. It's not advisable to apply for new credit when in the process of getting a mortgage, but right now all you've done is ding your score. How big of a ding is yet to be seen, but so long as you don't incur any new debt, you've only damaged one part of the profile so far.
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thom02099
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Postby thom02099 » Sun Mar 30, 2014 6:34 pm

WildBill wrote:[color="red"]I know. I really don't need to be called an idiot anymore, but I don't blame you for doing so.[/color] I knew since last year I was going to be applying for a mortgage this spring. I'm semi new to all this credit knowledge. 3 years ago I began the mortgage process and was told by a broker that I needed credit cards. According to him, I didn't have bad credit but I barely had any credit at all. Just car loans throughout my history all in good standing. I was always under the impression that credit cards were for suckers, and one shouldn't spend money one doesn't have. Apparently I was wrong. So I initially applied to Cap One as they were the only ones who would take on a credit newbie. First card was a measly $300 CL. Fast forward 6 months and Cap One gave me a rewards card with $1,000 CL. Both cards had annual fees but I was building history so I stuck with it. Turns out that broker was right, around 18 months later my score went from lower 600's to above 700. At that time I decided to try for prime cards, let them age and get rid of the subprime AF Cap Ones. I was approved for two Amex revolvers and was going to transition away from Cap One after the new ones aged a little. I also took on a Chase to keep my overall CL high. I cancelled one Cap One and goal was to cancel the other this year. A friend talked me into Discover because of the good rewards and also the exceptional US customer service and I figured hell why not. I'm not going to need credit again after this mortgage so I might as well make the moves now and then let em all age the next several years.

My thought process was to hold off until after beginning the mortgage process, but to do it before the mortgage kicked in because the huge drop in score a new mortgage produces for a time period.

Anyway, that's a glimpse inside my credit ignorant head. I pay all my bills on time, try not to spend money I don't have, but other than that I don't dwell on credit 24/7. I have 4 kids that I spend as much time with when I'm not working crazy hours at an insanely busy job. Hindsight now I see how obviously stupid what I did was. However during the process it seemed completely logical to me with no harm intended.

Bottom line, I'll find out tomorrow how bad I really screwed up. My loan officer is a stand up guy so I'd prefer to be upfront with him instead of embarrassing him with a surprise later on.


No one is calling you an idiot. You made a mistake. Many of us here have. That's why some of us are here. We learn from our mistakes and move on. It's fortunate that there are places like this for an exchange of information. Keeping things in perspective and giving someone a reality check is NOT meant to be degrading. It's to point you or anyone else in a direction that could be helpful.

We all have our own horror stories of credit mistakes and missteps. Not all that long ago I was in the 500s and trying to get that first mortgage loan, working my ass off to try to get up to 620 which at that time was the minimum score for a mortgage in this area. It's a lot of work to try to rebound from a mistake, but I think we all here feel confident that you can do it.

Hopefully, that stand up loan officer will have news for you tomorrow that's not as bad as it could be. Personally, I'll be keeping my fingers crossed for your success!
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