10 Easy Tips to Follow Between Your Mortgage Approval and the Closing Date of Your New Home
You’re ready! You have found your new dream home. You have been approved for the mortgage and signed all of the paperwork. All that is left to do, is to count down the days until you move in! The excitement is overwhelming and all you want to do is start packing.
Now while you are doing that, I would like to give you list of tips that will ensure that when that closing date comes, everything is in order with the mortgage approval.
Sometimes, even the smallest adjustment in your life can have an impact on the approval. In recent months there has been a tightening of credit underwriting standards by both lenders and mortgage default insurers, such as CMHC. Now – more than ever – it’s important to be careful of what you do between the time your mortgage is approved and when your closing date arrives.
Here are a list of 10 tips to keep in mind while you are waiting for your closing date:
- Don’t buy a new car or trade-up to a more expensive lease. Those increased payments may affect your affordability for your new home.
- Don’t quit your job or change jobs. Even if it’s a better-paying job, and/or in the same industry. You still are likely to be on a probationary period. Lenders mandate that you must be past your 90 day probationary period to accept the income from your new job.
- Don’t decide to become self-employed or accept a contract position. Even if it’s within the same industry. This new endeavour falls under a different category with the lenders and will almost immediately 9 times out of 10 make your existing mortgage approval null and void.
- Don’t transfer large sums of money between bank accounts. Lenders get especially skittish about this one because it looks like you’re borrowing money or worse. Be ready to document cash transactions or money movements for a minimum of 90 days.
- Don’t forget to pay your bills! Even ones that you’re disputing. This can be a real deal-breaker. If the lender pulls your credit bureau prior to closing, which they are doing more often than not these days, and sees a collection or a delinquent account, the best you can hope for is that they make you pay off the account before they will fund. You don’t want to have to scramble to pay off a debt at the last minute!
- Don’t open new credit cards. It’s tempting to want to get the new furniture, appliances etc that you amy need for your home. Just wait, until after you move in before seeking any new forms of credit.
- Don’t use your existing credit cards. As with #6, this falls back to affordability with increased debt payment requirements. It may result in you having to pay out the credit card in full prior to the closing.
- Don’t accept a cash gift without properly documenting it. Even if this is from proceeds of a wedding. Large deposits raise the same red flags as large transfers and should be avoided when possible.
- Don’t buy furniture on the “Do not pay for XX years plan”. Even though you don’t have to pay now, it will still be reported on your credit bureau, and it may become an issue.
- Always call your Mortgage Broker if unexpected changes do occur. Life happens and the best way to manage the change is to work with it as soon as it happens.
There is never a question that is too small or not in need of an answer. I welcome all questions and work with my clients to facilitate the best solutions to all challenges that may arise.
Tracey Brock Mortgage Broker, Dominion Lending Centres.