No one wants a call from their Mortgage Broker or lawyer saying, “There is a problem”.
After finding your dream home, negotiating a final price, and sending in the LONG list of documentation requested by your broker, you probably assume everything is concrete. The reality is that your financing approval is based on the information the lender was provided at the time of the application. If there have been any changes to your financial situation, the lender is within their rights to cancel your mortgage approval. To make sure this doesn’t happen to you, here’s what to avoid for a smooth closing of your new mortgage:
No matter what you’re financing, one of the most important pieces of the puzzle that all lenders will look at is your employment and income. Lenders’ policies surrounding proving how much of your income they can use for qualifying your mortgage, are very varied (another benefit of using a Mortage Broker is we know where to maximize your income to help you qualify). This means any change to your existing employment could hurt your financing approval. When it comes to financing, always be sure to check with your Mortgage Broker prior to making any changes to your current employment.
DOWN PAYMENT SOURCE
If you’re buying a new home, we’ll most likely need to prove where your down payment is coming from. If it is different from what the lender has approved, it could spell trouble for your financing approval. For example, if you said that your down payment was coming from savings and, at the last minute, mom and dad offer you the funds as a gift, this could affect your approval. This is an acceptable source of down payment, but only if the lender knows about it in advance and has included this information in their assessment.
Your mortgage approval was based on the debts reporting on your credit bureau at the time of approval. Depending on your mortgage closing date, it’s possible that the lender will pull a new credit report prior to funding your mortgage, and if you have any new debt this can really throw out the ratios we used when we qualified you for your new mortgage. Please always wait to purchase furniture, new vehicles, etc, until after you’ve moved in! If this can’t be avoided, give your broker a shout before signing those loan papers.
The littlest of mistakes can mean big swings in your credit score. If your credit score falls due to late payments, this can cause major issues with your mortgage financing. No matter what type of mortgage you’ve chosen, be sure to be extra diligent about making all your payments on time prior to your new mortgage closing.
MISSING LAWYER DOCUMENTS
Before a file is finalized, the lawyer must verify your identity documents and see that they match the mortgage documents. You may not think it needs to be said, but it is important to use your legal name when you apply for a mortgage. Even if you go by your middle name or a nickname, all legal documents should match. You’ll also need to provide your lawyer with a copy of your Home Insurance Policy. The Mortgagee listed must match your lender, as well as provide adequite fire insurance for the full cost of your home.
I’ll keep in touch right up to your possession day to make sure this ends up being a happy experience, rather than a heartbreaking one.