With lenders eagerly looking to build their client bases and interest rates being low, mortgages are getting approved fairly often these days. However for many buyers, the hard part isn’t getting a mortgage approval – it’s keeping it. There can be unexpected “land mines” buried in the ground you need to cover from the moment you apply for mortgage approval, to the time you actually move into your new home.
The time it takes to get an approval can vary. Depending on a number of factors it can take as little as three weeks, or as long as four months, to close a mortgage. During that time your life can change in a lot of ways that could affect your loan. Some things are completely out of your control: sickness, the loss of a job, damage to your property due to storms – all of these factors can contribute to your mortgage approval being revoked. Which can be totally scary. The good news is, that there is such a thing as “good mortgage behaviour,” and this is something you can control to make sure everything goes smoothly.
What is good mortgage behaviour? Basically, it’s following 8 simple rules about what not to do in between the date of your application and the day you get your funding.
Here is a DO NOT checklist to help you out.
Failure to comply with any “rule” on this list might force a revocation of your mortgage approval.
- Don’t quit your job, change industries, or start a new company
- Don’t miss paying any bills for any reason
- Don’t move large sums of money around between your bank accounts
- Don’t open any new credit cards, no matter how good the deal is
- Don’t buy a new car, or trade-up your car to a more expensive lease
- Don’t switch your job from salaried to commissioned
- Don’t make random or undocumented deposits into any of your bank accounts
- Don’t accept cash gifts without filling out the proper paperwork
If you follow these 8 rules, you’re exhibiting “good mortgage behaviour.” However sometimes it’s not possible to follow these points to the letter. For example, if your car lease is expiring… Of course, you need to renew the lease – but make sure the monthly payments are the same (if not similar) and check with your mortgage broker just to be sure. They are available to speak with you and help keep you on track. The same goes for accepting cash gifts from relatives. There’s a right (and a wrong) way to do it. If you accept a cash gift for a purchase and you don’t go through the right channels, your lender may disallow the gift and deny the loan.
To put it simply: don’t alter your financial situation, and your mortgage application should stay on track. When you’re applying for a loan, there’s a lot of areas to cover – and a lot of rules to follow. Do your research, and try to practice “good mortgage behaviour.” Most importantly, before you make any changes to your financial situation, ask your lender for advice or for help when trying to identify “good” vs. “bad” mortgage behaviour & avoid being schooled for stepping out of line.