The process of applying for a mortgage can be long and tiring for many. This might include a lot of paperwork, going through your finances meticulously and in some cases even waiting for a few months for your credit score to improve. Once you have gone through all these stages, applying for the mortgage and having it declined or delayed at the last minute can be very frustrating. This is particularly so if you had made big plans for the mortgage.
Many times, the failure to close a mortgage happens because of an applicant’s decisions after he or she has started the application process. After you are done with the paperwork, it has to be approved. It is during this duration of approval where some people make major mistakes that cost them their mortgage. Some of these include:
Change your state of employment
Generally speaking, it is easier for you to get a mortgage if you are employed because it shows that you have a steady source of income. However, there are many people out there who might have other goals, such as starting their own businesses. Having such a change in your job status will definitely influence your creditworthiness, and your loan might be rejected or the approval delayed. The same can also happen if you move from a higher paid job to a lower paid one, such as if you are demoted.
Get other major loans
As you are waiting for your mortgage to get approved, you may decide to get another loan such as a car loan. However, doing this only increases your debt to income ratio, which could influence the decision on your mortgage application. In addition to being delayed, you may also find that you’re offered the mortgage at rates that are higher than current mortgage rates in Montreal. This is because your indebtedness will be seen as a risk.
Rather than accruing new debt, you should consider paying off the debts that you currently have. This makes it easier for your mortgage to be approved since it will be easy to determine that you are not laden with debt.
Charge your credit cards too much
One other mistake that could cost you a lot is getting more credit cards or maximally charging the ones you currently have. Remember, paying for anything using a credit card increases your debt. When this debt reaches a significant level, it may not be tenable to also service a mortgage. Mortgage companies will notice debt changes between when you applied for the mortgage and when it’s approved.
Basically, this means that if you apply for a mortgage when you have a specific credit score, you should strive to ensure that that score remains that way or improves during the approval duration. Drastic changes will lead to denial even in cases where you could have gotten the mortgage.
Cosigning other loans
When you apply for a mortgage, a credit report will have to be generated at that point in time. Some people may find themselves in cases where they are asked to cosign a loan for a friend or relative. Though your intentions may be good by doing this, it may not be a good idea. When you cosign a loan or other credit facility for another individual, this will reflect as a change in your credit report. This means that there will be a marked difference in your credit status between the time you applied for the loan and the time it was being assessed for processing. This is usually grounds for delay or denial of the mortgage.
Delay in provision of paperwork
When you apply for a mortgage, you will fill in and submit the application forms, but the lender will usually ask you to submit other documents as well. These will differ according to various issues including the company you are getting the mortgage from. Always ensure that such paperwork is delivered on time, or it may negatively influence your chances of getting the mortgage.