In this writeup,  we will discuss what are the most important things we should keep in mind when we have received a mortgage approval however the mortgage is not closed as yet.

Delay Job Switches - Till the time you have secured the financed and closed on the property its advisable to not do a job switch or become an independent contractor. The lending institutions and banks like a stable permanent employment. Specially if the new employment is probationary, it is a red flag for the lender. Some lenders might not have an appetite on change of job roles, for example if you went from a technical role such as IT Architect to a pure managerial role or vice versa. The lenders are looking for a stable stream of income in the foreseeable future and are comfortable that way.

Avoid any Credit Cards or Car Loans  – You should stay away from applying any credit cards or car financing etc.  till the time till your mortgage is funded and you have closed on the property. Any loans or finance you take in advance of the home closing might negatively impact your credit worthiness and borrowing capacity.

Be Regular on Your Credit Card Payments – Missing on any of your card payments

will negatively impact your credit bureau and if the mortgagee pulls your score before completion, it might make it difficult with a reduced score, and if it doesn’t meet their threshold. I had one of my excellent buyer clients and they had a small expense in one of their US credit cards which was left unpaid and they missed to see the reminder email from the bank. Unfortunately, it was reported as default in their credit history and even though it was a insignificant amount, they had to wait for 6-8 months to rebuild the score to the level which banks desire.

Don’t purchase furniture on Credit – Before closing on the home it’s a good

idea to refrain providing your credit card to take furnishings  or appliances  on credit or a payment plan; let the home close successfully and then you can go for small financing as needed. The thumb rule always should be big loan first and then comes small loan.

Maintain History of Deposits – Generally the financial institutions will require a minimum of 3 months history of all the money which you are trying to utilize as your contributions towards purchase of the property (down payment). If you are expecting any money from external sources apart from employment or pension income you should keep a copy of the receipts to back it up as a proof. The whole intent here is that banks want to ensure that it is indeed your money which you are contributing towards making the Real Estate purchase.

Avoid being a co-signer – If you have co-signed on someone’s credit application and they default on the payment or have late payments that might negatively impact your credit score, which might be a hindrance for your mortgage borrowing ability. If the bank runes a check before closure it might alter their decision to allow the rental.

The basic theme of all of these points we discussed is that lender has the right to say that the conditions and terms have changed since you got it originally approved due to change in your job situation, credit worthiness, and borrowing ability etc.  And we want to avoid those situations till the time mortgage is closed successfully.

Wish you all the very best! Reach out to our dedicated team at Elixir for any queries you have in Real Estate and we will do our best to help.


Mudit Mehta
Broker of Record
ELIXIR REAL ESTATE INC.
Off: 416-816-6001 | [email protected]