Home mortgage shoppers should see an unexpected addition to the application paper blitz starting Jan. 1 — a mandatory alert on how their credit scores might affect the rate quote and terms they receive from their lender.

The new disclosure represents the end product of a congressional effort dating back to 2003 to make the crucial role played by credit scores in loan pricing more intelligible to consumers, and to alert applicants when negative information in their credit bureau files triggers higher rates or adverse terms.

Lenders will be required to provide the alert before applicants finally commit to accept mortgage offers, thereby allowing some consumers to double-think their decisions, order copies of credit reports and look for inaccuracies or outdated information. [more]

If you’re thinking about applying for a home mortgage later this spring, here’s some important news: Beginning June 1, your lender is likely to order a second full credit screening immediately before closing.

The last-minute credit report will be designed to find out whether you’ve obtained — or even shopped for — new debt between the date of your loan application and the closing. If you’ve made applications for credit of any type — for furnishings and appliances for the new house, a car, landscaping, home equity line, new credit card, you name it — the closing could be put on hold pending additional research by the lender.

If you’ve actually taken out new loans that are sizable enough to affect the debt-to-income ratio calculations used in your original mortgage approval, the whole deal could fall through. The added debt load could render you ineligible for the mortgage because you suddenly appear unable to handle the payments without a strain on your household budget. [more]