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Sep 08

Five things to avoid after you are pre-approved

  • Getting ready for your mortgage renewal, Pre-Approvals are important

The five things to avoid after you are pre-approved!

When buying a home, there is nothing worse than having your mortgage broker or lawyer call and say “there is a problem”. If you have found your dream home and negotiated a fair price, and you have supplied all the documentation to your broker, you probably assume everything is fine.
The reality is that your financing approval is based on the information the lender was provided at the time of the application. If there have been any changes to your financial situation, the lender is within their rights to cancel your mortgage approval. To ensure that you don’t encounter any last-minute roadblocks on your home buying journey, there are five major things you must avoid for a smooth transaction:

Changes to Your Employment
When submitting a request for financing, whether for a mortgage or car loan or to handle personal debt, one of the most important aspects the lender looks at is employment. If you were working at Company X for five years at $80,000 a year and change jobs before your upcoming mortgage is finalized, the lender will require proof from your new employer. If you change industries, they will need more proof that you are capable of keeping the job. Plus, for employment involving overtime or bonuses, the lender often requests a two-year average, which is not possible from a new position. Another employment change that could hurt your financing approval would be moving from an employee to a self-employed contractor. A good rule of thumb is to wait to make any major employment or life changes until after the deal has gone through.

Down Payment Source
As mortgage financing is based on the initial information provided, you will most likely need to do a final verification of the down payment source. If it is different from what the lender has approved, it could spell trouble for your financing approval. Even if you said that your down payment was coming from savings and, at the last minute, mom and dad offer you the funds as a gift, it could affect your approval. This is an acceptable source of down payment, but only if the lender knows about it in advance and has included this in their risk assessment.

Debt
A week or two before your possession date, the lender will obtain a copy of your credit report and look for any changes to your debt load. Since mortgage approval is based on how much you owed on that particular date, it is important not to increase your debt before the deal is finalized. Buying a new car or items for the new home must be postponed until after possession; even if they are “do not pay for 12 months” campaigns because you will need to fulfil those payments, regardless of when they start.

Bad Credit
One of the biggest roadblocks to mortgage approvals is credit card payments. When you are in the process of getting financing or waiting to take possession of your home, it is important that your credit score remains positive. If your credit score falls due to late payments, this can cause major issues with your financing. Even if you have a high ratio mortgage in place which requires CMHC insurance, a lower credit score could mean a withdrawal of the insurance and removal of any financing approval.

Missing Identity Documents
Before a mortgage is finalized, the lawyer is required to verify your identity documents and see that they match the mortgage documents therefore it is important to use your legal name when you apply for a mortgage. Even if you go by your middle name or a nickname, all legal documents should match.

To help avoid last minute roadblocks and catastrophes with your mortgage application, be sure to keep in touch with me at all times during the mortgage process. If there are any changes from your initial mortgage application, it is important to advise them well in advance and to run those changes by myself to ensure they will not affect your application.

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      Thanks MCAP! Beautiful party, so lovely to see you Thanks MCAP! Beautiful party, so lovely to see you all! Grateful for your partnership. 🙏🏻 Always ahead of the curve in supporting your mortgage brokers. And a visit with Brenda Shaughnessy! Thanks for making the trip Brenda! 💙 @unmarketing great to meet you both! Loved what you had to say! Excited for your residency! 🙌🏻🙌🏻
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Calling a snow day tomorrow! Friday fun ❄️☃️🧣🧦 Settled in @mountengadine. So far, this year was a whirlwind of activity in the housing and mortgage market. Thanks to our incredible referral partners and clients we provided a LOT of mortgage pre-approvals! 👩🏼‍💻👨🏻‍💻💵 🙌🏻 Some of our clients are finding the right home, some continue the search. Rates are stable. Lots of out of province interest in our housing market. Yes, Alberta is as pretty, fun and full of adventure as our photos! 🏔️🏔️🏔️ 

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      The Prime rate has risen by another .50%. For the The Prime rate has risen by another .50%. For the first time in 15 years, fixed rates are now lower than variable rates across the board. The borrowing costs for variable rate mortgage and lines of credit will rise. Not the news any of us wanted, but the new reality is that inflation is severely impacting the Prime lending rate and is not slowing quickly enough. 

Thoughts on the news from Sherry Cooper, DLC Chief Economist - "The Bank of Canada hikes the Prime rate by 50 bps.... The Governing Council of the Bank of Canada raised its target for the overnight policy rate by 50 basis points today to 4.25% and signalled that the Council would "consider whether the policy interest rate needs to rise further to bring supply and demand back into balance and return inflation to target.

This is more dovish language than in earlier actions where they asserted that rates would need to rise further. Some have interpreted this new press release to imply that the Bank of Canada will now pause or pivot. Expect there will be additional rate hikes next year, but they will be more measured and not on every decision date. The BoC may refrain from dropping Prime until 2024. 

Three-month rates of change in core inflation have come down, an early indicator that price pressures may be losing momentum. However, inflation is still too high, and short-term inflation expectations remain elevated."

Bottom line: This will likely be the last oversized rate hike this cycle. The Governing Council next meets on January 25. Whether they raise rates will be data-dependent. If they do, it will likely be by 25 bps. Even if they pause at that meeting, it does not rule out additional moves later in the year if excess demand persists. I expect further monetary tightening, the continued bear market in equities, and a further correction in house prices. 

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      The end of each year is a great time to start to p The end of each year is a great time to start to plan for next year’s budget. ✨🎄💸

That may be buying your first home, your dream home or cottage or figuring out how to manage debts and pay down your mortgage faster. There are many ways to tackle your mortgage or reduce consumer debt with a mortgage refinance. 🏦 

Our advice begins with a thorough mortgage pre-approval. Did you know that we provide pre-approvals for first time home buyers but also for home buyers selling a home and buying, downsizing, or planning for a rental property or cottage? We also talk to many clients about buying a home for family - a child going off to university or aging parents. 📚 Budgets are great tool for all ages and all financial decisions. 🤓

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      Thinking about buying your first home? Start by ge Thinking about buying your first home? Start by getting pre-approved! 

By a human, not an online app. Mortgage pre-approvals should take up to one hour (60 minutes, not 60 seconds). We will collect details on employment, savings, debts, down payment, your credit score, and the range of homes you are interested in. 😊

A pre-approval tells you your mortgage maximum (the highest approvable mortgage amount), provides example payments, and explains interest rates, fine print, and all the options that a great mortgage should have (things like pre-payments to principle). Now is the time, plan ahead and let’s build your homeownership budget together. 🏡

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When you are buying a new home really, really consider that during the three weeks before the possession date it’s best to be at home, not travelling OR planning ahead to sign with your lawyer in advance of any travel plans. Remember that signing in advance requires every stage - the financing condition period, providing your income, downpayment and property documents and signing forms to be completed in advance. 🤷🏼‍♀️

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Our clients were all approved at the federal government qualifying interest rate - at least 2% higher than the actual rate they received. 👍🏻 Rising rates were factored into their mortgage approvals. 

For variable rate mortgage holders - don’t lock into a fixed rate without a robust conversation around the reasons and possible outcome. Five years is a very long time. Variable rates are like waves. 🌊 They are peaking, will flatten and in the future (predicting when isn’t easy 🔮) will decline. It’s not a always going up or always going down situation. 📉📈

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All interest rates are in essence “variable” as most Canadians have five year terms. Every five years the rate will change. To lock into a fixed rate at what may be the peak time of variable rates may not be wise. 🤓 These decisions are highly dependent on your personal situation, employment, budget, cash flow and future plans for the property. 🏠

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