You’ve been pre-approved for a mortgage to secure your mortgage financing; you’ve got a fantastic rate, you’ve had your offer accepted on your dream home, and the lender is content with the supporting documents. This article will list some of the things you shouldn’t do to compromise your home buying opportunity between your mortgage finance completion date and your closing date.
1. Don’t quit your job.
Don’t leave your job, even if you are being offered a higher salary. Changing your job before closing means you will have to report your new employment status to the lender. From there you will be required to support your mortgage application with your new employment details. Most lenders want to see the lendee past their probation period before feeling comfortable with proceedings. It’s best to hold off until your mortgage has been closed. Afterwards, you are free to look for new employment.
2. Don’t apply for new credit
By applying for new credit and taking out new credit, you can jeopardize your mortgage. Now that you have your new home in mind, it may be tempting to shop for new furniture for your new home.
The day after you close on the house, feel free to shop on credit to furnish your new home and any other card that can save you money on the many purchases you’re likely to be making as a new homeowner.
3. Don’t spend your closing costs
Before completion, the lender wants to see you with 1.5% saved up to cover closing costs. If you are a first-time home buyer in BC purchasing a home valued less than $500,000, your closing costs are waived. If you are purchasing a second home or one valued over $500,000 you will have to pay closing costs. So you might think that because you shouldn’t take out new credit to buy furniture, you can use this money instead. Bad idea.
4. Don’t close existing credit
The lender has agreed to lend you the money for a mortgage based on your current financial situation and this includes the strength of your credit profile. Mortgage lenders and insurers have a minimum credit profile required to lend you money, if you close active accounts, you could fall into an unacceptable credit situation.
Depending on your personal situation, you might want to take some time to get comfortable with your new mortgage payment — and after that, it’s probably okay to splurge on that new kitchen table, go on a long vacation, or open a new line of credit or get rid of existing credit. However, doing so before you close could potentially put your mortgage financing in jeopardy.