Once upon a time there was a lovely young couple who saved and saved and saved all of their pennies for the down payment on a home. They met with a friendly mortgage professional to get a pre-approval and quickly provided all the required documentation.
Their bright eyed real estate professional helped them to navigate the home buying process when they had discovered their dream home. The I’s were dotted and the T’s were crossed on all of the forms the lawyer set before them and so at long last they sat back to gleefully await the day the keys to their castle would be handed to them. The end, right? Alas it is not. This story which should have the happiest of endings does not.
Our heros made a choice after the approval was granted but before the possession of the home which has killed their mortgage and put their dreams on hold.
Unfortunately all too often we see people make this mistake and so this week we are going to look at the things you must never do during the mortgage process.
Or at least you should never do any of them without first asking your mortgage professional how it will affect your approval.
1. Change jobs. There may be an amazing opportunity for you at a new company but before you accept please keep the following in mind:
a. Will you be on probation? Lenders will not accept probationary employment.
b. Is the new income paid the same as your current? By this I mean if there is any bonus, overtime or commission aspect to your pay you may be killing your approval. These types of income require a two-year history before they are acceptable to the lenders and CMHC.
c. Are you now considered as a contractor or even self-employed? Once again we require a two-year history unless you are working in the exact same field as before and have an amazing contract in place and even then things have become tricky.
d. Have you decided that you are simply unable to continue for personal reasons? Here’s the thing, the lender has approved you based on the information you provided and they verified. Unfortunately for you that means that you need to maintain the status quo until you take possession of the new home.
2. Buy a vehicle. Your car may finally have given up on you and you have to buy a new one but before you do call your mortgage pro to make sure the monthly payment will not put your affordability ratios out of line.
3. Change your credit picture. Do not pay for 12 months, 18 equal payments, a new line of credit or maxing out your credit cards can all affect your affordability ratios and kill your mortgage approval. Again, a quick call to your mortgage professional is all that is needed to find out if any of these things will be a problem.
4. Your credit score drops. The other thing to watch is that you make all of your payments on time. If you have chosen to build a home the lender will be pulling your credit again prior to possession and if your credit score has dropped because of late payments or maxed out credit cards they have the right to cancel the approval.
So please, do not put yourself at risk and make sure that you keep your financial picture consistent throughout the mortgage process to ensure that your mortgage story ends happily. Until next time!
Pam Pikkert is a mortgage broker with Dominion Lending Centres – Regional Mortgage Group in Red Deer.