06 Apr
When aiming to purchase your dream home, the worst news would be to receive a call from your mortgage broker or lawyer who reveals that you have a problem with your application. When you have found your perfect home, negotiated a fair price for it and provided all the necessary documentation, you might have assumed that everything is probably fine.
In reality, it is important to note that the final approval of the borrower is based on the information that the lender was provided at the time of application. Should there be any changes to your financial situation after the submission of your application, the lender has full rights to cancel your mortgage approval. In order to make sure that you do not encounter any last-minute problems on the way to purchasing your dream home, here are some key issues that you must avoid for a smooth transaction.
Changes to Your Employment
One of the most important aspects that lenders research is your employment, whether it be for a mortgage application, car loan, or to handle a personal debt. If a person is working for a company for five years and for the upcoming mortgage, they change their jobs, the lender will require proof from the new employer. If you change your job industry, additional proof will be required which will certify that you are capable of keeping the job.
Moreover, when bonuses or overtime are involved in your employment, the lender will request you to provide a two-year average, and this is not possible if you have switched jobs recently. Another issue that could affect your mortgage approval is pertinent to switching from an employee to a self-employed contractor.
Source of Down Payment
It is important to note that mortgage financing is based on the initial information that has been provided and it is essential that you provide verification for the source of your down payment. If the source of your down payment differs from what was mentioned in your application, it could increase the chances of your mortgage application being rejected. Even if you have provided the funds from your savings and at the last minute you receive additional funds as a gift, it will affect your mortgage application and such information needs to be provided to the lender beforehand.
Debt
To ensure that you do not have any new debt, the lender will obtain a copy of your credit report a week or two before the mortgaged amount is provided to you. Since mortgage approval is based on how much you owed on that particular date, it is essential to not increase your debt before the deal is finalized. Any item or a new car must be postponed until after the possession of your new home.
Low or Bad Credit Score
One of the biggest issues or roadblocks perceived during your mortgage approval is having a low or bad credit score. When you are in the process of getting financing or waiting to obtain possession of your home, it is essential that your credit score remains positive. Because of late payments, your credit score can decrease, and this can cause major issues with your financing. Even if you have a high-ratio mortgage in place, a lower credit score could mean a withdrawal of the insurance and removal of any financing approval.
Missing Identity Documents
Before the finalization of a mortgage, the lawyer is required to verify your documents and ensure that the documents you have submitted match with your identity documents. Hence, it becomes important to use your legal name when you apply for a mortgage. Even if you go by your middle name or a nickname, all legal documents should match.
