Factors that can jeopardize your mortgage approval

Being approved for a mortgage is about more than having enough funds for a down payment. For the process to be successful, lenders consider various aspects such as your income, employment history, credit history and the property you wish to purchase, to name a few.

Ensure it all goes smoothly

You have finally saved enough money for a down payment, and you are excited to buy a property. You have spent a considerable amount of time looking for the right home and your mortgage has been approved. However, before the purchase actually goes through, any significant changes to your finances can affect your mortgage approval. A lender can revoke your mortgage approval any time before the closing date if there are changes to your financial circumstances.

Most lenders will request credit bureau reports to be pulled within 30 days of the approval and they might even request a new one between the mortgage approval and the funding date, especially when there is a long period of time between the two.

To ensure a smooth process from the time you have been approved for a mortgage to receiving the funds for your mortgage, keep these helpful tips in mind.

• Avoid purchasing a new car or upgrading to a more expensive lease/loan, as the higher car payments could increase your debt servicing and affect your mortgage eligibility.
• Avoid quitting your job or switching jobs, even if the new position pays you better, as you may be on a probationary period at the new job. If you are in doubt, call your mortgage expert to determine if this could jeopardize your approval.
• Steer clear of changing industries, deciding to become self-employed or accepting contract positions, even if it’s in the same industry. These changes could potentially jeopardize your mortgage approval.
• Be cautious about transferring large sums of money between bank accounts, as the lender may view it as borrowing money. Be prepared to provide documentation for cash transactions of transferred funds.
• Keep paying all your bills in a timely manner, even if you are disputing some of them. A lender may pull your credit bureau rating prior to closing and if a collection or a delinquent account appears, the best hope is that they ask you to make a payment prior to the lender funding your mortgage. It’s best to address these issues before the closing to avoid last-minute complications.
• Avoid opening new credit cards or applying for additional credit until after your funding date.
• Don’t co-sign a loan for someone else. You may completely trust the person you are co-signing for and you know they can make the payments. However, as a co-signer, you are legally responsible for making the payments and if the person you co-signed for defaults, it can affect your ability to make your mortgage payments.
• Properly document any cash gifts, including those from wedding proceeds, before depositing them. Give your mortgage expert a call for guidance if you have a significant amount of cash to deposit before the funding date.
• Delay purchasing furniture on deferred payment plans, as these purchases will be reported on your credit bureau rating and could impact your debt service ratios, especially if your mortgage approval was tight from the beginning.

Stay informed for assured success

Buying a home and getting approved for a mortgage is not meant to be a difficult process. It is important to do your due diligence and know as much as possible and make informed decisions on your path to homeownership. If you are in doubt, it’s always best to call a mortgage expert before making a move that could jeopardize your approval.