You Found Your Dream House? You’ve finally found the house to call home, and you are about to make an offer to purchase? There are some things to remember and keep in mind when you are purchasing a home or waiting for your mortgage to fund. It is very important that you consider all of the following since your application may be declined: 1. Assuming Your Pre-Approval is All You Need Run away from the “non pre-approval”. A full approval means your credit’s been checked, your lender has reviewed the type of income you have, and where your down payment is coming from. I’ve had clients come to me after they had a pre-approval and waived their financing condition, and it turned out the bank had declined their application when their credit bureau was pulled. I always tell my clients that I need to have a full disclosure, that way we can select the most appropriate lender, and make sure there are no surprises down the road. 2. Quitting Your Job, Changing Employers or Starting a Business Undeniably, some job changes are out of our control and inevitable. But if you can, wait to change jobs or quit to start a business until AFTER your closing date.... Lenders want to see foreseeable, consistent income, and your mortgage approval is based on the information you provided on your initial mortgage application. Talk to your mortgage broker as soon as you even think there might be a change in your current employment, so the issue can be addressed appropriately.
3. Failing to Provide Proof of Down payment Lenders will go through the last 90 days of statements for the account or accounts your money is coming from. You’ll need to explain, and prove the source of, any large deposits. Lenders need to comply with Canadian anti-money-laundering regulations, as well as wanting to confirm that your down payment isn’t borrowed from an undisclosed source. If part or all of your down payment is a gift, you’ll need to document that as well, have a gift letter filled out, and provide a paper trail showing where the money came from. Any money coming into Canada from elsewhere in the world will be carefully reviewed, and must be on deposit with a Canadian financial institution at least 30 days before your closing date. 4. Deciding to Buy a New Leather Couch As tempting as it may sound, you don't need to buy that new leather couch. DO NOT add any new debt ( big ticket purchases), unless you’ve discussed it with your mortgage broker. Your mortgage was approved based on your original set of monthly obligations and your credit profile at the time of your initial application. If the monthly costs increase – such as monthly payments for furniture or appliances , or a car loan – your qualifying ratios may exceed the lender’s maximum, which may lead to your application being declined. Remember: A lender reserves the right to review your credit rating just before the closing date of your mortgage - if there have been any material changes in your rating, they could withdraw their mortgage approval. 5. Being Late on Your Current Bills I get it, you have a lot on your mind: from saving up for closing costs and down payment to all the little details you need to handle before a home purchase, and if you already have kids: well, you know what I am talking about. But please make sure you remember to maintain your bill payments – from mortgages to cell phone bills – on time: you can either sign up for automatic bill payments or add an alarm to your calendar to remind you. As noted in point # 4, the lender reserves the right to declined your mortgage application if anything material changes in your finances. This includes your credit rating. A late payment can really hurt your credit score and jeopardize your mortgage agreement, especially if your credit score is borderline with the lender’s minimum credit score requirement. The bottom line: Once you obtain a full mortgage approval, avoid changing pretty much anything that has the slightest impact on your financial situation until your closing date. Doing so ensures you’ll obtain your financing and buy this house to call HOME. As always, feel free to get in touch with me direct at 647-893-2535 or [email protected] Sign Up Here for Monthly Mortgage Updates
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