WHAT NOT TO DO AFTER YOU'RE
Pre-Approved For Your Mortgage
Something weird happens when people get pre-approved. Once clients see what they can afford for a new home, they think they have more money than they actually do, and they want to go spend. Here are our rules for what NOT to do after pre-approval.
1. Don’t Apply for New Credit
One of the most important things not to do after you’ve been pre-approved is to acquire more debt. Applying for more credit could negatively affect your credit score, and extra debt could change the debt-to-income ratio we used to qualify you in the first place.
If a lender sees that change, you may be denied your mortgage once you’re ready to buy your new home.
2. Don’t Make Any Big Purchases
Don’t buy winter tires, a new computer, or a new mattress after you're pre-approved.
You’re going to need that cash for closing costs, such as lawyer and inspector's fees, on your new home.
3. Keep Paying Your Bills
While you’re avoiding getting into more debt right now, don’t forget to keep paying the bills for your current debt.
Missed payments after your mortgage pre-approval are not the signs you want to send lenders.
4. But Don’t Pay Off All of Your Debt Completely
If you pay off all of your debt after you’ve been pre-approved, your lender will want to know where that money came from. That will mean more paperwork from you so we can track these funds and more scrutiny from the lenders about where you received the money.
Keep paying the bills and wait until after you’ve closed your home purchase, including closing costs, to pay off those credit cards.
5. Keep a Paper Trail
While we’re mostly paperless, there is some paper you need to keep. Make sure you keep a record of all deposits made into your accounts after you’ve been pre-approved. Large deposits could raise a red flag that you’ve borrowed money from somewhere else, which could have an impact on your debt-to-income ratio and how much you are actually able to borrow.
Keep all your receipts and statements until your purchase is finalized.
6. Don't Start a New Job
If you can hold off, don’t start a new job until after you’ve moved into your new home.
Your mortgage pre-approval is based on your current income and tenure on the job. Changing jobs typically means changing income. This could affect the amount you’re actually allowed to borrow.
7. Don’t Co-sign Someone Else’s Loan
While you may be doing a favour by co-signing someone else's loan, this could backfire when you’re ready to get your mortgage. Even if it’s not your loan, it could still affect your debt-to-income ratio. We will also need to collect more paperwork!
8. Don’t Ignore Requests From Your Lender or Broker
The lender that has provided your pre-approval may need additional documentation or information. So when we email, call, text —whatever the case —don’t ignore our requests if you want to keep your pre-approval in check!
Remember that the home-buying process can move quickly. If you do have to be away, let your broker know how they can contact you if required.
9. Don’t Forget About Seller Concessions
The person you’re buying your home from may have some concessions in place that you will be required to cover in your purchase price. These can include inspection fees, title insurance costs, or lawyer’s fees, just to name a few.
10. Don’t Ghost Your Broker
We know that buying a new home can be a busy time, but it’s important to keep us in the loop during the process. If anything has changed in your financial or employment status, or you’ve found a home that is more than your current pre-approval, let us know right away.
Seriously. Even if you’re thinking about a more expensive home, call us! Think of us as your financial conscience.