What NOT to Do Before Your Mortgage Funds

When purchasing a home or waiting for your mortgage to fund, there are several important things to keep in mind to avoid preventable issues. Everyone seems to have advice on what to do during this process, but it's just as crucial to know what not to do.

As your mortgage broker, I’m committed to ensuring a smooth closing for you and your family. Below is a list of things that could impact your mortgage approval, and it's important to remember that up until closing day, the lender has the right to cancel your mortgage approval if there are any significant changes to your application or financial situation.

Key Points to Consider Before Your Mortgage Funds:

Be Honest: Always provide truthful information on your application, including details about any other real estate you own.

Income and Employment Changes: Any change to your income or employment, means you might not be able to qualify for the mortgage or prove your ability to repay it back so:

• Avoid losing your job - do not resign
• If you are on probation with your employer, let me know
• Do not reduce your income level
• Do not change the status of your employment from full-time to part-time
• If you are currently on maternity or paternity leave, or think you will be shortly, let me know
• Don’t forget to disclose if you are currently on short-term or long-term disability
• If you receive other income such as Canada Child Benefit (CCB), and it’s going to stop soon, let me know

Down Payment and Closing Costs, remember:

• Do not spend your down payment on other things!
• Don't move funds around between accounts:

> If you transfer part of your down payment from your TFSA or RRSP to your checking account, then to your savings account, and later decide to move it again to another savings account for better interest rates, it complicates things.
> In this scenario, you'll be required to provide a 90-day history for all accounts where the money has been held. As your mortgage broker, we then need to explain all the unusual deposits and clearly connect the source and destination of those funds to the lender.
> To avoid complications and streamline the process, it’s best to minimize the movement of money between accounts until your mortgage financing is fully finalized.

• Avoid surprises, by making sure you have enough money for ALL closing costs that we discuss
• There might be property tax holdbacks and adjustments to be included in closing costs
  
• Provide me with proof of your down payment as soon as possible
  
• Be prepared to explain large deposits that you show in your bank account to comply with Money Laundering Regulations

Things that might affect your Credit Rating….

A lender reserves the right to review your credit rating just before the closing date of your mortgage - if there have been any material changes in your rating, they could withdraw their mortgage approval, avoid this happening by…

• Not increasing your debt load unless we have talked about it
• Not buying big ticket items like a new vehicle without talking to me first!
• Not volunteering to guarantee or co-sign on a loan or mortgage for anyone else Not applying for new credit cards or loans
• Not opening a “don’t-pay-for-a-year” account
• Not closing any accounts unless I advise you to
• Not stopping to pay your bills including your current mortgage
• Trying to fix your credit rating unless we have discussed it
• Not disclosing any car lease payment, student loans you have or any credit problems/issues you have had in the past
• Postpone furniture purchases on deferred payment plans until after funding, as these transactions can affect your credit report and potentially impact the approved mortgage amount.

And a few final tips:

• If your closing dates are not on the same day, you might need bridge financing!
• Don’t change your closing date without telling me
• Make sure you provide me with all the documentation I request at your earliest convenience
• Don’t wait until the last minute to arrange for property (fire) insurance. 

Shopping Around: Everyone will be excited about your new home purchase, but please don’t believe everything you hear. Just remember, that if you ask too many people their opinion, confusion might well set in. If you feel the need to shop around for another option, remember that too many applications to other lenders can impact your credit rating negatively. Talk to me first so we can discuss this.