10 Mortgage Mistakes to Avoid
No matter how many times we’ve moved in our lives, arriving at a new home is always exciting; but it seems even more fun when it’s a mortgage that you’re about to close on! Make sure there are no loose ends and everything goes smoothly by reviewing the following tips before your closing date.
If a homeowner believes that if they have been approved for a mortgage, they are good to go, it is not correct. These people are unaware about last credit check on their bank account with the lender or mortgage insurance provider before completion. If there is any change in credit usage and score from few months before, this could affect what you qualify for – or whether or not you get your mortgage at all.
To avoid having your mortgage approval status reversed or jeopardizing your financing, be sure to stay away from these 10 mortgage mistakes:
1.Beefing up your application
Don’t try to ‘beef up’ your financials when you’re applying for a mortgage. Be honest – this is especially true when seeking the advice of a professional, as their main goal is to assist you in your home buying journey. It’s also important to give accurate information surrounding your income, properties owned, debts, assets and financial past. Be open and honest about any delinquent payments or bad credit history (according to fair credit reporting laws), bankruptcy or consumer proposal. We are here to help!
2. Getting pre-approved
Asking for a mortgage is a negotiation, and what you put down on paper will be examined. Be honest about your financial situation, both the good and bad. Your ability to get the best deal will vary depending on your overall profile, so be straight with everything – however embarrassing it might be – when talking with your mortgage broker or bank representative. There’s nothing worse than getting pre-approved only to find out later that you forgot to submit certain important documents.We are here for you!
3. Shopping around
Choosing a mortgage broker is something you should not take lightly. It is easy to simply sign up with your bank, but the problem is that because the bank offers hundreds of mortgages, they tend to push one of them on you rather than help you make the best decision based on your current financial status. Even if they are offering a good rate, there may be other things you need or don’t need. A mortgage broker will guide and possibly lead you to the right option. With access to hundreds of lenders and financial institutions, a mortgage professional will help you find a mortgage with the best rate and terms to suit YOUR needs!
4. Not saving for a down payments
Your down payment is a critical part of homeownership, and a useful financial tool that you should utilize when purchasing a home. A down payment reduces the overall amount of financing you need and increases the amount of equity right from the start. Down payments also show the bank that you’re serious. In Canada, the minimum down payment is 5%, but it’s recommended to make 20% if possible.
5. Changing employers
As employment is one of the most important factors for loan approval, it is important not to change employers in the middle of the process. Banks prefer to see a long tenure with your employer, because it indicates financial stability. It’s best to wait for any major career changes after your mortgage has been approved and you have the keys to your new place!
6. Applying or co-singing for other loans
Applying for a mortgage loan can be exciting because you’re in the process of getting a new house – but it can also be stressful. Why? Because you might have to apply for additional financing on top of whatever loan your bank is offering. And if all this financial news comes at once, it could hinder how much you qualify for with your mortgage.
Applying for new loans can wreak havoc on a mortgage application, so can co-signing for other loans. Co-signing signifies that you can handle the full responsibility of the debt if the other individual defaults. As a result, this will show up on your credit report and can become a liability on your application, potentially lowering your borrowing power.
7. Avoiding credit missteps
When applying for a mortgage, you need to keep your financial situation in check. Don’t exceed the spending limits on any of your cards or lines of credit and make sure none of your payments are late while your finances are being reviewed. This has a direct impact on whether or not you’ll be seen as a responsible borrower and approved for financing.
8. Having too much debts
It is important to make sure your debt is in check. This way you can be eligible to buy a new home. But before you consider purchasing a new home, it’s important that your current credit cards are cut up, and not paid off by a lender so that you may understand how difficult it could be for future possibilities in the foreseeable future. Your credit score is an indicator for what kind of interest rates will be applied to your loan, which also affects the total price or new property that you pay for. A well-maintained record of timely payments on loans will make obtaining lower rate loans available to you.
9. Large deposits
Banks want to be careful about all of your assets, and will want evidence for every unexplained transaction in the past three months. If you are purchasing a home or even if you just want to refinance your current mortgage, be sure to provide a paper trail for any such transactions and deposits in the past few months before the bank approves your loan.
10. Marrying into poor credit
Having the financial discussion before getting hitched can save your future finances. Knowing about your partner’s credit score beforehand can help give you greater financial freedom when it comes to your mortgage approval process. Finances are one of the leading causes of divorce, so it’s important not to wait until after you meet with a broker to find out about liability in that area and use it as a bargaining chip for higher down payments and better rates all around.
If you’re looking to get a mortgage, make sure you avoid these ten mortgage mistakes and consider working with a mortgage professionals
Consult with the team of professionals powered by Dominion Lending Centres, Concept One Financial Group is a team of mortgage professionals work for our customers – not the lenders – to ensure our customers receive the best rates and products available in today’s marketplace. Whether they are looking to purchase their very first homes or upgrade to a new home, mortgage renewal, refinance for equity take out, purchase investment properties.
Our lending solutions are catered for the conventional, self-employed, new immigrant, and non-resident; residential and commercial mortgages; Insurable and uninsured. As is customary in the field of Canadian mortgages, we deal with big banks, smaller lending institutions and private lenders. Each client’s financial needs differ, which is why we work with a variety of lenders.
