Income, debt ratio, spending habits, and credit score can all greatly affect a successful approval, states Cheryl Jessamine with Advanced Mortgage.
Below are some of the top factors mortgage lenders will consider:
1. RULE ONE: Besides having a job, do not change jobs until after you take possession of your new home. If you are on probation, most lenders will not consider you for approval. Although exceptions can happen, it is often on a case-by-case scenario.
2. RULE TWO: Don’t default on your bills and pay them on time. I know this seems like common sense, but one or two missed payments can negatively impact your credit score to the point of not getting a mortgage.
“I have seen a credit score decline in as fast as 6 days because the borrower missed two small payments. Those two payments were the reason that they could not get approved”.
3. RULE THREE: Don’t make a bunch of credit inquiries with the credit bureau. Too many hard inquiries can negatively impact your credit score. Do not start applying for several credit cards if you are thinking about buying a home. Lenders look at that activity and start to question why you are seeking out so much credit.
4. RULE FOUR: Understand what consumer proposals and bankruptcy can mean. Yes, bad things happen to good people. However, these situations can adversely affect your credit score and access to credit. A consumer proposal will remain on your credit bureau file for 3 years after you have paid off the debt or 6 years from the date it was filed, whichever comes first. A bankruptcy claim will remain on your file for 6 to 7 years depending on the province. Both situations will affect your ability to secure a mortgage.
5. RULE FIVE: Understand that your type of income will be a factor. Part-time work income, self-employment, seasonal employment, short-term/long-term disability, or moving provinces without securing a job first are all real-life scenarios. The issue with all of the above factors is they can create really big challenges when applying for mortgage approval.
You can find Cheryl Jessamine’s contact information under the ‘Local Heroes’ heading.
