Buying or refinancing a home can be an exciting time full of opportunities. During this time there are a few key things to keep in mind and to NOT do during the mortgage application process. Once you’ve decided this is the right choice for you and your family, it’s critical to connect with a reputable Mortgage Broker to guide you through the process. There are some definite things you should be aware of that may potentially affect your ability to access the best mortgage solutions for your situation and goals. Here are some points to consider as you move forward.
What should I NOT do after applying for a mortgage?
Here are a couple of best practices you should follow once you’ve applied for a mortgage:
Do NOT apply for credit
After your application is submitted by your Mortgage Broker, many lenders will pull their own credit bureau. This is for transparency purposes and to support their internal control processes. If you apply for additional credit (including co-signing for someone for credit), your credit score could slip. Additional debt load may have to be added to your application which may jeopardize your ability to get approved.
Be extra vigilant with “don’t pay a cent events.” Even though you may not have a scheduled payment for 12 or 24 months, lenders will pick up a monthly payment effective immediately. They do this to ensure you can still afford the mortgage when the scheduled payment starts.
Do NOT change your job
Another thing to avoid when buying or refinancing a home is to change your job. Many deals will “tank” on income. Therefore, it is critical to not change jobs while your are in the approval/funding process (before your funding date). There are some exceptions to this rule. If you are considering a job change during this window, please consult with your Mortgage Broker before you make the decision to see if it will affect your borrowing ability.
Can I use my credit card before closing on a house?
Normal credit card use should not be a concern. Especially if you’re in the habit of paying off the credit card bill once the statement arrives. If you are making major purchases that you cannot pay off during the normal billing cycle, please consult with your Mortgage Broker to see if the purchase will negatively affect your borrowing ability.
When is the last credit check before closing on a house?
Technically, your credit bureau can be pulled/updated at any time during the funding window. This does not typically happen if the closing date is within 30 to 60 days from deal submission to the lender. If however, your closing date is greater than 90 or 120 days, it is reasonable to assume that an updated credit bureau will be required by the lender.
Do mortgage lenders check with your employer?
Yes – absolutely! As part of the underwriting process, a lender will verify your income with your employer. This is an added level of due diligence to make sure everything aligns and there is no mortgage fraud. This is tied to the previous point of not changing your job during the financing process. Lenders need to make sure you have current active employment. This means that the income used on the application is confirmed and aligns with the Letter of Employment, your recent pay stubs, and your historical income T-slips and your CRA Notice of Assessment documents.
When planning to purchase or refinance, there are lots of online resources available. Knowing how much house you can get approved for BEFORE you go shopping and especially before you put in an offer is a great idea. Check out our great mortgage calculator to help you understand how much mortgage you can afford. Please download our My Mortgage Planner app – it has tons of useful information from land transfer tax estimators to online pre-approvals. If you’d like help or more information you can email us at info@TheMortgageGuyNiagara.com or book a no obligation consultation.