Mortgage lenders asking you to close cards: urban legend?

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kcm7
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Mortgage lenders asking you to close cards: urban legend?

Postby kcm7 » Tue Apr 29, 2014 8:33 pm

Hi all!

I've heard that sometimes a lender will ask you to close a couple cards to qualify for a mortgage so that you decrease your risk of going into too much debt and falling behind. Is this something any of you all have heard/experienced? I've Googled around, but couldn't find anything conclusive .....

Reason I ask is that I have seven cards and an acct history of 13 years, and I only use three of the cards regularly. The rest have 0 balance. I'd want to keep them all to keep that history alive so I really wouldn't want to close any cards. Looking into buying in the next year, so curious to see if any of you know if this is really A Thing.

Thanks!
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JoDa
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Postby JoDa » Tue Apr 29, 2014 11:24 pm

I've never been asked to close any cards in 3 purchases and 4 mortgages. I suppose if your lines were a *huge* portion of your income, they might ask, but you can always counter with "but I've never/rarely used it/carried a balance. Mostly what they're concerned with is your current usage and payment history. Just don't open anything between getting pre-approved and closing.
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mrow
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Postby mrow » Wed Apr 30, 2014 12:04 am

JoDa wrote:Just don't open anything between getting pre-approved and closing.


This^

We signed up for a 2 year contract for a Verizon FiOS triple play bundle, not thinking it would result in a hard pull, after we had been preapproved months before and a week or so before closing and the mortgage company basically blew a gasket wanting to know what this new inquiry was and wanted documentation about it. This being the same mortgage company that preapproved us for an $950,000 mortgage when the house we were closing on was a little over a third of what we got preapproved for in a dual income, professionally employed household. Mortgage companies are crazy.


Suppose it could be worse though. The interest rate on my parents first house in the late 70s was 17%.

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Postby JoDa » Wed Apr 30, 2014 12:55 am

Yeah, the electric company did a hard pull on me for my new account, even though I already had an account with them. My credit monitoring was still active from keeping track while I applied for the mortgage, and I was freaked out, only to see it was Pepco. I hate that they can do that and then not report consistent payments. But bet your bottom that if you DON'T pay they'll be reporting!
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Postby mrow » Wed Apr 30, 2014 1:30 am

Should be <sarcasm>fun</sarcasm> to see how it all goes down in 3 years or so when we apply for a mortgage overseas in the Bahamas for our vacation home. Anyone here actually have experience getting a mortgage overseas while still a US citizen? We'll probably apply through Scotiabank, a Canadian bank that is big down there, so hopefully it won't be too bad.

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Postby takeshi » Wed Apr 30, 2014 8:10 am

kcm7 wrote:Looking into buying in the next year, so curious to see if any of you know if this is really A Thing.

Hasn't happened to me but it can happen. You can't just poll to determine if it's going to be an issue for you. You just have to determine that by dealing with your mortgage company.

thom02099
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Postby thom02099 » Wed Apr 30, 2014 8:53 am

I don't think it's as prevalent as it once was, but I do recall it happening, back in the 80s when I got my very first mortgage. While shopping around and using lenders recommended by my realtor, one of the lenders wanted all credit cards to be at zero balance for 3 months prior to loan approval; another only allowed 3 credit cards to be reporting as active. Closed accounts, obviously, didn't matter to them, but they weren't keen on more than 3 active credit card TL. Also had to document a timetable to have an auto loan paid off, as long as it was within 6 months of closing, they'd approve the loan. Since that time, I've not had any problems, especially with a refi that I did a few years back while carrying a half dozen credit cards and 2 installment loans. My income supported it, so no issue.
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Postby djrez4 » Wed Apr 30, 2014 10:03 am

Happened to us last year. We were right on the edge of approval because they wouldn't accept my partnership income, only wages. The mortgage officer asked my wife to close the one card that had a balance on it. If there had been no balance, he wouldn't have asked.
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Postby travisrauh » Fri May 02, 2014 12:08 pm

Bank of America actually asked me to close all cards despite being PIF.. This was about two months ago... and that's as a "platinum privileges" client. Needless to say I strongly recommended they go pound sand.
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Postby itsmeandrew » Sat May 03, 2014 2:27 pm

I just closed on my mortgage and they asked for two cards to be closed. One was my wife's and one was my own. They said it was a debt to income thing, but I don't exactly understand that because both cards were at zero. My income is only about 20K right now and my wife's is about 28K with my CL's being 19K and hers only 1K. But for whatever reason, they asked us to close them. Not an urban legend.
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