Despite earlier reports to the contrary, it turns out that your mortgage lender will not have to pull a second full credit report on you hours before closing on your home purchase or refinancing.

In a clarification of a policy announced earlier this year, mortgage giant Fannie Mae now says applicants will need to come clean about any debts they have incurred since they submitted their mortgage application — or debts they never disclosed on the application. But a formal pre-closing credit report will not be mandatory to confirm creditworthiness.

Instead, loan officers can use other techniques to verify that you haven't financed a new car, taken out a personal loan or even applied for new credit in any amount that might make it more difficult for you to afford your monthly mortgage payments.

Although Fannie made no reference to specific services in its recent clarification letter to lenders, some commercially available programs claim to be able to monitor mortgage borrowers' credit activities on a 24/7 basis, flagging such things as inquiries, new credit accounts and previous accounts that did not show up on the credit report that was pulled at the time of initial application.

One of those services is marketed by national credit bureau Equifax and dubbed "Undisclosed Debt Monitoring." Aimed at what Equifax calls "the quiet period" between application and closing — often one month to three months — the system is "always on," the company says in marketing pitches to mortgage lenders.

Fannie's new policy puts the burden of detecting these debts squarely on lenders or loan officers. Whether they pull additional credit reports — still an option allowed under the revised policy — or use some form of monitoring service, lenders must guarantee that the debt loads stated in any mortgage package submitted for purchase by Fannie Mae are scrupulously accurate as of the moment of closing. If not, the lender probably will be forced to endure the most painful form of punishment in the financial industry: a forced "buyback" of the entire mortgage from Fannie Mae.

What does this mean if you're planning to finance a home purchase or refinance your existing mortgage into a new loan with a lower interest rate? Tops on the list: Be aware that sophisticated credit surveillance systems are now being used in the mortgage industry.

Next, try not to inquire about, shop for or take on new credit obligations during the period between your application and the scheduled closing. If you seriously want that new loan, keep your credit picture simple — no significant changes, no additions — until you settle on the mortgage.

As we approach the peak of this year's Atlantic hurricane season, home improvement expert Danny Lipford explains the importance of having a backup generator during power outages caused by severe weather.

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Our September 2010 Santa Clara County Real Estate Newsletter is now online…

Read It Here Now!

A weak housing market received a tiny boost from apartment construction last month. But the overall outlook remained dim as applications for building permits fell to the lowest level in 14 months.

Construction of new homes and apartments rose 1.7 percent last month, according to the Commerce Department. Driving the increase was a 32.6 percent surge in apartment and condominium construction — a small fraction of the market.

Still, requests for building permits, considered a good sign of future activity, fell 3.1 percent.

A rebound in housing is considered critical for a sustained economic recovery. But builders continue to struggle with weak demand for new homes caused by high unemployment and a glut of foreclosed homes on the market.

The July increase in housing construction pushed total activity to a seasonally adjusted annual rate of 546,000 units. Building activity in June was weaker than first reported. It fell 8.7 percent to an annual rate of 537,000 units, the slowest pace since October of last year.

Housing construction got a boost earlier in the year when the government offered buyers up to $8,000 in federal tax credits. But after the incentives expired at the end of April, sales and constructions activity slumped.

Before you start shopping for a new home, it is important to be aware of the essential tasks that must be taken in order to make sure you get the home of your dreams at a price you can afford. To make buying a home easier, below is a list of the do’s and don’ts when buying a new home:

• Do Maintain a Good Credit Score: Lenders look at the credit score of a potential mortgage borrower to make sure they will be able to pay the monthly mortgage payments. It is important that you check your credit rating for any errors and clean up any outstanding bills. Make sure you always pay your bills on time, particularly your credit cards and other loans.

• Do Get Pre-qualified: Before you start searching for a new home, it is important to get pre-qualified for a mortgage from a reputable lender. By getting pre-qualified, you will know much you will able to spend on a new home. This will help you narrow your search for a home you can afford and make legitimate offers. As well, you are more likely to receive an accepted offer if you have a prequalification certificate.

• Do Use a Licensed Real Estate Agent. Real estate agents take the hassle out of the home buying process. The agent will act according to your best interests and will find a home that meets your needs. They are also familiar with the appropriate documentation you will need to get a mortgage, help you arrange for an appraiser, and they will know about all features of home and the surrounding community so that the price you pay is fair.

• Don’t Take on Any New Loans: While you are waiting to get qualified for a mortgage, don’t take out any new loans. It will look bad on your credit rating and it will increase your monthly expenses. Also, it will reduce the amount you can spend as a down payment on the new home.

• Don’t Max Out Credit Cards: If you max out your credit cards, it will drastically reduce your credit score which will reduce your chances of getting a mortgage. If your credit cards are at their limit, consider paying them down before you apply for a mortgage. Also don’t consolidate your credit cards as it will cause your minimum payments to increase and it can hurt your credit score as it will look like you maxed out that one card.

• Don’t Switch Jobs: Lenders look favorably on people who have stayed at one job for a long period of time. It shows your job history is consistent and safe. If you switch jobs before getting approved for a mortgage, it will negatively affect your mortgage approval.

Because buying a new home is such an important life event, it is essential that you have the knowledge of the home buying process and what steps you have to take to ensure you get the best home that meets your and your growing family needs. By doing so, it will help make sure you live comfortable and happily for many years in a home that you love.