It is almost time to move into your new home. Your realtor found you your dream home, and the owners accepted your offer. Your mortgage broker found you the right lender, and you supplied all the documentation they requested and signed off on all the conditions. All that has to happen is for you to meet with the lawyer, sign your documents and pick up your keys, right?
Maybe not. Out of the blue you receive a call from your broker saying there’s a problem with your mortgage, and the lender has decided to withdraw your approval. When a lender agrees to grant a mortgage, they do so based on the information they were provided with in the application. However, if something changes in your financial situation, the lender has the right to cancel your mortgage approval. How might this happen? Here are 5 ways to kill your mortgage approval.
If there are any changes in your employment situation, the lender will need to re-qualify you based on your new employment. They will check your income again, and if the new job has a lower income, or the income type has changed (salary has become commissions for example) you may no longer qualify for your mortgage. If you decide to go from being an employee to a self-employed contractor you now need to show a 2 year average of your income, which you cannot do. So, you may not qualify even if it’s doing the same job with the same company. Bottom line: Do Not make any changes in your employment until you are in your new home!
I know your dream home needs dream furniture, (not to mention a dream car in the driveway!) but any increase in your debts could lead to the lender canceling your approval. The lender approved you based on how much you owed at time of application, and if they check your credit a week or two before completion and find new debts and new payments, you may no longer qualify. Do not be tempted by any “do not pay for 12 months” deals. You now owe this money and it doesn’t matter when the payments start. Bottom line: postpone taking on any kind of new debt until you are standing in your new bedroom.
Not only will the lender check to see if you have taken on any new debt before completion, they will also check your credit score. If this has dropped due to late payments this can kill your approval. Bottom Line: Make sure to keep up all your regular credit card and loan payments!
When you were approved, you told the lender where your down payment is coming from. The lawyer will ask you to confirm this is still the down payment source when you meet with them. If something has changed, (for example, you were going to use your RRSP’s but now your parents are offering you a gift) the lender may cancel your approval. Bottom line: Stick with your original down payment plan!Bonus tip:
once your down payment funds have been put into your account, try not to move that money around, even between your own accounts. The lawyer will ask you to verify the source of the funds, and this can be much trickier if you have to sort through multiple accounts with multiple transactions.
When you go to see the lawyer they are required to verify who you are based on your government issued ID, and to make sure the names match the mortgage documents. This is a good thing, you wouldn’t want someone who is NOT you to take out a mortgage! But, if you don’t have ID or the names on the ID don’t match what is on the mortgage documents it can be a problem. You may use a nick-name or your middle name in every day use but make sure you use your legal name when it comes time to apply for your mortgage. Bottom line: Keep the names straight!
Follow these guidelines, and stay in touch with your DLC Mortgage professional right up till you get the keys and you can make this a stress free and happy experience.