All about Applying for a Mortgage

It is critical that you complete the mortgage pre-approval process before searching for your next home. There are some common errors and pitfalls once you receive a pre-approval that could result in the rescinding of your mortgage. A pre-approval is based on your work, credit, profits, and assets in a snapshot. It could have a detrimental effect on your ability to secure a mortgage and cause the lender to refuse the loan if any of these conditions alter -great post to read.

This is a list of the most common errors committed by homebuyers before their final mortgage approval is received:

Change in Jobs – Contact your loan officer immediately if your work changes after getting your pre-approval and before closing your mortgage. And if a promotion or pay raise is your new career, it could be subject to a probationary period. Often if your employment includes commission income, tips, bonuses, or is subject to work expenses, before you display a 2-year history of this form of income, your lender can consider this income as unreliable.

Cash Deposits – Government legislation and investor guidelines require mortgage lenders within 60 days of applying for a mortgage to record all significant deposits. Both large deposits indicating the source of the funds must be registered. These include but are not limited to: cash gifts, asset sales, loans under 401(k), a transfer from one bank account to another, or some other significant deposit. It is possible that transfers from a joint account would also include full disclosure of the originating account and a letter from the account co-owner that you have full access to the funds transferred.

Inquiries/New Transactions- It would be important to clarify any credit inquiries that are reported on your credit report for the previous 90 days before applying for a mortgage. You will need to make a declaration if any new debt occurs, and the debt will need to be included in your debt ratio. During the loan process for a new property, any deposits you make such as: appliances, furniture, or home facilities will also need to be clarified, registered, and included in your debt ratio.

Overdrafts- All bank statements which are issued for the mortgage loan will be closely checked by mortgage lenders. To fix the explanation for the over-drafts in the future, you will need to justify any over-drafts and what you have done.