So my first 2 "investment" properties will be closing 10/20 and 10/24. House 1 is with Bank of America and I applied for mortgages with about 5 different banks before I proceeded with accepting BoA. House 2 is with Provident, I "switched" my mortgage application from house 1 to house 2 with them. On credit inquiry explanations, for BoA, they did not include Provident because it was not on my credit report yet, so all they got is, No new debt, for all the explanations. For Provident, under Bank of America I put, No new debt yet, since we didn't close yet and I technically didn't incur new debt yet...
Do they pull credit reports at/near closing again? Or will there be any issues with closing both of them, since I never told one about the other?
We almost didn't get approved for House 1 with BoA..., we got permits and sellers credit to change the denial into an approval.
I don't want to have any issues with closing, time is of the essence, we have our first baby coming Nov 20th and we need to have the properties cleaned up and rented at least 2 weeks before then (just in case baby comes early)...
@Martin S. maybe either of you can answer if this would fly?
@Martin S. I would worry to much about it. Been in a similar position. Keep both guns blazing and reload.
From my experience they will do a soft pull on your credit prior to ordering docs and will also require a verbal verification of employment again as well.
Inquiries shouldn't be an issue because you " really haven't opened new credit yet," and you are just shopping for different banks.
I know they've pulled another credit report on us 1-2 days before closing, and at closings, we're usually required to sign documents stating we have no new credit or applications for anything. Not sure that's part of what you will have to sign, but it definitely would muck things up for me as I'd feel I'd have to disclose it before signing, unless I had enough savings to pay off the mortgages if they got called, and then I probably wouldn't care as much and take the chance.
Well, you'll certainly be committing fraud when the second loan closes, if you have to sign an updated debt status, and likely so on the first closing, since your intent was obvious. Will anything come of it down the line....I guess you'll find out.
All lenders will do a soft pull right before closing to make sure no new debt was opened. Additionally, any new loan application is entered in to a database (MERS) that can be pulled up by any other lender. This makes buying 2 properties back to back (without disclosing) virtually impossible.
I have no intention of committing fraud. Its just that no1 asked and I answered all questions truthfully, (I put "yet", lol, but hey that's the truth.)
The only issue I see is that I would create new debt after I close on the first house, but how is that any different than doing an app-o-rama? I didn't purposefully try to buy 2 houses at once, it just happened that I found 2 great deals at around the same time, and on the 2nd deal the seller changed the closing date earlier than I wanted....
Also, we more than qualify to purchase both properties, so its not a problem to disclose. But am I just supposed to tell the 2nd bank that I'm buying another house first? I need to get the loan commitment for that house before I can actually be 100% certain that I will actually get to purchase it, so I guess I need to wait a few more days before its set in stone.
MERS has nothing to do with loan applications, and doesn't store any such info.
@Martin S I am going through a similar situation right now.
I cash out refi'd and got a HELOC on my primary residence (closed mid September) and near the end of those deals closing I placed an offer on an investment property that I planned to finance (closing mid October).
Did not disclose it on the initial application because it was not completed yet, and as we all know things can happen right up until the last minute before closing new loans, so I wasn' t going to say I had those loans when I really didn't.
Fast forward to today, Refi/HELOC closed, underwriters on investment property noticed HELOC lien in MERS so they asked for a letter of clarification regarding the lien and why did not initially disclose, I wrote a letter explaining what I just said and so far no issues (*knocks on wood*)
My situation had more time between them than yours do, giving the underwriters enough time to make sure it checks out without delaying the process. In your case though, I may consider letting the second underwriters know ahead of time just so you can get the appropriate pieces of information together (I would think as long as you have ample reserves to cover both properties and can show a solid future plan for rehab and rental income potential, you should have a better chance of it not being a problem)
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