Avoid These Mistakes to Keep Your Mortgage Approval In Good Standing
After you’ve been approved for a mortgage, it’s important to understand that you aren’t out of the woods just yet. Being approved for a mortgage does not give you a 100% guarantee that you will receive the funding. There are certain actions you should avoid to ensure your lender does not revoke your approval.
Read below to learn about everything you should and shouldn’t do to ensure that your mortgage remains in good standing, along with the reasons you should remain cautious before closing.
What Happens After Your Mortgage is Approved?
Once your mortgage is approved, you’re almost finished working with your mortgage broker (until it comes time to renew or refinance, that is). Still, there are a few small steps to take before you reach the closing stage, which is the end goal. Notably, you will need to work with your mortgage broker to continue monitoring rates for potentially better rate and product promotions.
Why You Should Be Cautious After Your Mortgage Is Approved
You would normally think that the word “approved” signals that everything is taken care of. In the case of a mortgage, this is not entirely true. You could jeopardize your funding before you receive it. Many hopeful homeowners are shocked to learn that you can receive a mortgage denial at the very last minute. For this reason, your financial profile should be the same on your closing date as it was when you were approved.
Plenty of mistakes can lead to this outcome. This and other common oversights are listed below.
Things to Avoid Until Your Receive Your Mortgage Funds
Applying For New Credit
We don’t recommend applying for new credit until after closing day has arrived. Credit applications at any point during the mortgage process can jeopardize the outcome you’re hoping for. Having already passed a credit check won’t let you off the hook, as you may have to face more checks.
Missing Credit Payments
Keeping up with your bills and credit payments is key during the mortgage approval process. Missed payments can quickly lead to mortgage denial.
Making Large Purchases
You might be tempted to buy items for your new home after your mortgage is approved. Even if you have already budgeted these purchases, we recommend holding off on big transactions for a while, as they can affect your debt-to-income ratio.
Leaving or Changing Your Job
We know that this type of decision isn’t always made willingly. Still, you should try to prevent major changes being made to your income, as they will directly affect your debt-to-income ratio. Even a job with a higher income can lead to problems, so speak with your mortgage broker before taking on a new job.
Taking Extended Leave
Most of the time, workers are on extended leave for a good reason. Unfortunately, even the most understandable circumstances can make it harder for you to verify your income to keep your mortgage. Injuries, new babies, and disability are all reasons homeowners have cited.
Travelling Out of the Country
You’ll want to put your vacation plans on hold until your mortgage is finalized. Leaving the country is not only likely to increase your debt, but you never know when you’ll need to be available to communicate with your mortgage broker or lender.
Failing to Keep a Record of Purchases
It is your responsibility to keep track of your expenses while you apply for a mortgage. For that reason, you need to keep some kind of paper trail – especially when it comes to fairly large purchases.
Not Responding to Lender Requests
Your lender might request various documents or numbers throughout the process. You need to respond to these requests promptly, or you may void your agreement.
Co-Signing a Loan
Even if a loan isn’t for you, having your name attached to it can affect your debt-to-income ratio. For this reason, we don’t recommend co-signing loans until closing.
Moving Money Between Accounts
We recommend sticking to one account while you secure your mortgage. Otherwise, you run the risk of offsetting the amounts that have already been calculated and accepted.
Not Informing Your Lender of Changes
Any time your circumstances change, it is your duty to tell the lender. This includes changes in income, debt, job, or anything that might affect your agreement.
Getting your mortgage approved is an exciting step for future homeowners. Still, it’s important to be wary of the mistakes that could sabotage your successful mortgage approval. A mortgage broker can help you steer clear of these mistakes and provide more relevant advice during the home buying process.
Chris Allard’s experience in the field means he can get you offers with over 50 financial institutions lending in Ottawa. Every lender has many mortgage products they offer, which means Chris and his team will make sure a mortgage caters to your needs while also ensuring you get a competitive rate. Chris Allard is a proud mortgage broker of Smart Debt Mortgages, independently owned and operated. Smart Debt broker #12236.