There seems to be some massive mistakes people make when they apply for a mortgage to buy a home.
It’s amazing the things I have seen when people blow their credit right before applying for a mortgage or after they’ve been pre-approved for a mortgage but then ruin their credit approval between the time they make an offer and the closing date of their purchase.
I sure hope that you have seen my posts called “The Importance of Pre-approval“ and “Difference Between Mortgage Brokers vs. Banks“
But what I want to share with you today are the 10 Commandments of what they’ll shall not do when applying for a mortgage in the near future or buying a home.
I have seen so many clients kill their own deals because of these mistakes so my favourite mortgage brokers have shared this information with me so that I can help you save yourself from some major mistakes
Please keep in mind that everything I’m about to share with you applies in the time frame just before you apply for a mortgage… Or… Between the time you get approval for your mortgage until the date of your actual purchase.
#1. Thou shall not change jobs or become self-employed or quit your job.￼￼￼￼
There is nothing wrong with following your passion or dream when it comes to a new career choice as long as it is after the day you get your new keys to your new home.
But before applying for a mortgage or during the closing. It can jeopardize your deal if you change jobs during this time.
#2. Thou shall not buy a new car, SUV, or minivan during the same times I just mentioned.
Again, there is nothing wrong with getting that car you always wanted as long as it is right after you get your new keys to your new home.
But before that time it can change your qualification eligibility or your credit score, among other things.
#3. Thou shall not buy furniture before closing date with money set aside for closing costs or your down payment.
#4. Thou shall not use credit cards excessively or let those accounts go a few days late with your payment.
Sometimes you pay a credit card online. It might take an extra day for it to be processed. That extra day might register as a late payment with the credit bureau.
The late payment might take a month or two to register with the credit bureau. But then upon your closing date for your real estate purchase there can be bad news.
Credit ratings also depend on how much available credit is on your credit cards.
So, if you have a $10,000 limit on your credit card and a $1,000 balance, but then you go buy a TV or some furniture before you close the purchase of your new home for $9,000 on the same credit card, even though you’re still not over your limit it will affect your credit score.
#5. Thou shall not omit debts and liabilities and financial responsibilities to your mortgage broker.
If you saw my video about mortgage brokers versus banks then you know it’s not the mortgage brokers that you have to impress or be embarrassed in front of.
And it’s not the mortgage brokers who approve or decline your mortgage application.
So conveniently leaving out some important details will not improve your odds of getting approved for the mortgage.
In fact, it will hurt your chances because the mortgage broker (if he or she is really good at their job) will “Package“ your mortgage application and then “salad“ to the various mortgage lenders so that they can get you the best mortgage.
But if you leave out something important then when the lenders find out about it, and then you always do, then it means your mortgage broker might have been able to package your mortgage application differently or present it differently to the lender so as to make it more likely for approval
But if they don’t know certain facts or details then it’s a missed opportunity for them to do what they do best for you.
It makes everyone look bad and ultimately you get declined.
#6. Thou shall not stop paying your current rent or mortgage.
I hope that one doesn’t need further explanation.
#7. Thou Shall not apply for new credit cards or new car loans or anything that will show up on your credit bureau report as a new credit inquiry.
If a mortgage lender sees that you are recently applying for more credit elsewhere they might fear that you will have too much credit or potential debt available to you which ultimately makes you more of a risk to them.
#8. Though shall not cosign on a loan or mortgage or car lease for someone else.
Same explanation applies as in my last point.
#9. Though Shall not make large deposits to your bank account without first checking with your mortgage broker.
Receiving a lot of money is always a good thing. Whether the money is earned, won, or a gift.
But there are strict rules by mortgage lenders for when a relative gives you a gift of money to help you with your down payment.
They were also strict rules about money laundering.
I’m sure if you are reading this you were not involved in money laundering but it is a current problem that does exist so banks do look for it very carefully and scrutinize every large deposit along with where that deposit came from.
I’m not saying to keep that large sum of money under your mattress.
I just recommend that you speak to your mortgage broker before making the deposit.
The mortgage brokers that I know can give you the proper advice on how and when to make your deposit so that it doesn’t raise any red flags with the mortgage lenders for your application.
#10. Thou shall not change banks, bank accounts, or continually transfer money from multiple other bank accounts into one bank account.
Many people tend to put a little money here and a little money there.
I often hear people say that if they need a larger down payment they can simply move a few thousand dollars from here and a few thousand dollars from there.
Same as in my previous rule, whether they are watching to make sure your money comes from alleged gifts from the allowable sources, or they are looking for money laundering, having a lot of transfers can raise red flags with the lenders..
If you need to transfer money all into one account from other accounts and you want to know what is allowed, I’m happy to connect you with my favourite mortgage broker who can tell you how to do it in the best possible way.
And if you were thinking of moving in the future and you’d like a one pager of everything I mentioned in this post so that you don’t hurt your chances of getting a mortgage approval I’m happy to email you this PDF sheet. Just contact me and I’d be happy to send it to you.