What NOT To Do Between Your Mortgage Approval and Funding Dates

Given the evolving market dynamics and stricter credit evaluation criteria implemented by both lenders and mortgage insurers recently, it's crucial to exercise caution during the period between mortgage approval and funding.

Did you know that lenders may conduct fresh credit checks just before funding, particularly if there's a significant gap between approval and funding dates. They also have the right to cancel your mortgage application if there are any material changes to your situation between when your mortgage was approved and the closing (funding) date.

Here are 7 key tips to keep in mind during the period between mortgage approval and funding:

1. Refrain from purchasing a new vehicle or upgrading to a pricier lease. Avoid major credit-based transactions unless you can demonstrate to the lender that they'll be settled before your closing date.

2. Avoid quitting or changing jobs, even if it's for a better-paying position, as you might still be under probation. Any transition in employment status, including self-employment or contract work within the same industry, should be deferred until after mortgage funding.

3. Exercise caution when transferring substantial sums between bank accounts, as it might appear as if you're borrowing funds. Be prepared to provide documentation for any cash transactions or transfers. 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.

4. Ensure timely payment of all bills, including disputed ones, to avoid jeopardizing your approval. Lenders scrutinize credit reports before closing, and any collections or delinquencies could lead to last-minute complications or even cancellation of the mortgage approval.

5. Avoid opening new credit cards or lines of credit until after the funding date to minimize any impact on your credit profile.

6. If receiving a cash gift, ensure proper documentation before depositing it, and consult with your mortgage broker beforehand if needed.

7. 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.

By following this steps you can help ensure a smooth mortgage funding process and mitigate any potential risks to your approval.

Do you have any other mortgage related questions? Email me at [email protected]