What NOT To Do When Getting A Mortgage

Most Mississauga and Vaughan home buyers rely on a mortgage to buy a home, and that’s why they will do anything in their power to prove to the lender that they deserve a loan. As a buyer, you probably have saved up for the down payment, asked about different mortgage rates, talked to a mortgage broker, and even picked a lender. You feel good and ready, but don’t forget that there is still a long way ahead of you. Unfortunately, some buyers get too comfortable too soon and get loose with their finances, thinking that the mortgage is in their pocket when it actually isn’t. Here are the red flag behaviours that could put you in a bed light at the lender’s office.

Taking Out Other Loans For Major Purchases

If you’re about to apply for a mortgage, it won’t look good if you have other debts running along with the mortgage. It will show on your credit score and increase your debt-to-income ratio. The debt-to-income ratio is not supposed to exceed 30%, and if it does, you will be seen as a risky borrower, and such a reputation can easily leave you without a mortgage loan or with hefty interest rates. If you have an emergency and need instant cash, maybe you can ask your family or friends for help, but if you want a new car, you should wait until the mortgage is under the belt.

Delaying Payments That Are Due

If you are a financial procrastinator who always pays their bills last minute, whether it’s the heating bill or your credit card balance, you might be playing with fire. You could easily miss the due date, and it’s enough to happen only once to affect your credit score. However, if it happens more than one time, lenders will assume that you’ll fall behind your mortgage payments as well and may not give you the mortgage money. So simply end the bad habit.

Career or Job Change

Lenders will examine every aspect of your finances to determine eligibility, and one of the critical requirements is steady employment for around two years. Changing your job around the time you apply for a mortgage can be seen by lenders as a loss of steady income. Of course, if you secure a promotion or a better-paying job in the same field, it shouldn’t be an obstacle, but starting a new career from scratch is a different story. It probably won’t pay so well at the beginning, and your income may temporarily decline. So don’t prequalify or switch careers before you get your mortgage approved. If you know for sure that you will accept a lower-paid job soon, make sure to opt for the adequate mortgage amount and not the maximum when looking to buy in Mississauga or the GTA.

Spending Your Savings

You probably already know that you are required to pay at least a minimum of 5% of the down payment. Saving up for the down payment may take time, but when you have the money together, don’t be tempted to spend it bit by bit on other things, like new furniture or vacation. After all, you’ll need the cash for additional costs as well, closing costs, legal fees, etc., so the more you have, the better for you.

If you want to know more on preparations for buying a home, advice on financing a home purchase, or you are looking for a home, contact Manoj Kukreja here.