You’re approved for a mortgage, but haven’t taken possession yet – what NOT to do!
Okay, so we’ve worked together to secure financing for your mortgage. You are getting a great rate, favourable terms that meet your mortgage goals, the lender is satisfied with all the supporting documents. The only thing left to do is wait for the day that you take possession and your mortgage funds. Once you’re approved, you’re approved, right?
Wrong. Believe it or not, changes to your financial or job situation after approval but before possession can affect your qualification.
Here is a list of things you should NEVER do in the time between being approved and removing the financing condition and your possession date.
Thinking of quitting your job, climbing the corporate ladder, taking a sabbatical or following your dream of being your own boss between the time of your approval and mortgage funding? Well until this mortgage funds stay right where you are unless you want to reapply with the same or new lender. Your application was approved based on the information provided to the lender and any major change in employment must be disclosed to the lender and could result in another round of review which will delay your funding.
See above. Again, your application was approved on the information provided and any major or material changes in your income must be reported to the lender. Reduced income will be reviewed and you can expect delays in funding your mortgage.
We get it, you’re excited about moving into your new home. You’re out shopping for the new bedroom suite, the couch and recliner for the family room and the entertainment centre for the media room. Taking out new credit can jeopardize your mortgage. Wait until you have the keys to your new home and then you can shop your brains out.
Again, your file was based on you having a certain amount of debt. If that amount increases, it can push your debt service ratios up and you may no longer qualify for the mortgage you were previously approved for. Wait until you’ve taken possession, then, fill your boots!
This one sounds odd but the lender approved your mortgage based on your current situation and this includes the strength of your credit history and profile. Lenders have been known to re-pull your credit report days prior to funding. Paying off and/or closing accounts could change your credit profile putting you in an undesirable situation.
Continue to make all payments on all credit sources. Never give anyone a reason to back out of the mortgage approval. Not paying a bill changes your credit profile in a negative way.
Lenders want to see that you have enough funds to pay for legal fees. If you don’t have the cash, they want to see that you have the capacity to borrow these funds without pushing your debt service ratios above the allowable level. If you’ve had to use credit to pay legal fees, that affects your debt profile (see #3 above).
We get it! You want to help others anyway you can but now is not the time. If you co-sign for another you are 100% responsible for the full payment on that loan and it will be included in the liabilities portion of your application. Not disclosing your interest in a property, and being a co-signer is an “interest” in a property, is considered Fraud for Shelter and is a criminal offence.
The lender approved your application based on the purchase contract. Any changes could cause the lender to have second thoughts. Discuss any proposed changes with your Home Buying Team (Real Estate Agent, Mortgage Broker etc.) first.
Your brother-in-law means well but things have likely changed in the mortgage industry since he got his last mortgage and he is unaware of your unique financial situation. Work with qualified professionals, always!
It is easily assumed that once your approved for a mortgage anything that happens after is irrelevant. The truth is any changes to the application need to be updated with the bank and this could affect how you qualify for the mortgage and ultimately cost you your new house and your deposit.
So, before you make any changes to you start buying furniture on credit or quit your job to start your own business, talk to me. We can discuss how and if these changes will affect your approval.