5 Approval Roadblocks You Should Know
Buying a home is exciting, but nothing feels worse than getting a call from your mortgage broker or lawyer saying, "There's a problem." You’ve found your dream home, agreed on a fair price, and provided all your paperwork—so you probably assume everything’s good to go. However, mortgage approval is based on the info your lender gets at the time of your application. If anything changes in your financial situation, they can cancel the approval. To avoid last-minute surprises and keep things running smoothly, here are five major roadblocks you should be aware of:
1. Changes to Your Employment
Lenders care a lot about your job when they approve your financing. If you’ve been working at the same company for five years making $80,000 a year, that’s a stable profile. But if you switch jobs right before your mortgage is finalized, the lender will need proof from your new employer. A bigger shift, like switching industries, could trigger even more scrutiny. And if your income relies on bonuses or overtime, lenders usually want to see a two-year average—something you can’t provide if you’ve just changed jobs. The same goes for moving from being an employee to being self-employed. The bottom line is that it’s best to wait on any major career changes until after the deal is done.
2. Down Payment Source
The lender will need to verify where your down payment is coming from. If your original plan changes—say, your down payment was from savings, but your parents decide to gift you the money at the last minute—it could cause a hiccup in your approval. While a gifted down payment is fine, the lender needs to know about it beforehand to factor it into their assessment.
3. Existing Debt
Just before your possession date, lenders typically pull another copy of your credit report to check for any new debt. Since your approval is based on your debt at the time of application, it’s important not to increase it before everything is finalized. So, that new car or furniture for the house—no matter how tempting the "buy now, pay later" deals are—should wait until after you’ve moved in.
4. Bad Credit
Credit card payments are one of the biggest hurdles to mortgage approval. If you miss payments or your credit score drops while you're waiting for your financing to go through, it could cause serious issues. Even if you have mortgage insurance in place, a lower score could lead to the insurance being pulled, which might cancel your approval entirely. Keep making those payments on time!
Want to know more about how your credit affects you - check this out
5. Missing Identity Documents
Before your mortgage closes, your lawyer needs to verify your identity documents to make sure they match what’s on your mortgage. Make sure you use your legal name when applying for your mortgage—even if you typically go by a nickname or middle name. This can prevent any unnecessary complications at closing.
To avoid these roadblocks, it’s important to stay in touch with me throughout the mortgage process. If anything changes from your initial application, let me know as soon as possible so we can make sure it won’t derail your approval.
If you're in the market for a new home or thinking about applying for a mortgage, let’s get ahead of any potential issues. Reach out to me directly, and we can book a meeting to review your situation. Together, we'll make sure you're on the right track and fully prepared to get approved for your mortgage with confidence. Whether you’re a first-time homebuyer or looking to refinance, I’m here to help guide you every step of the way.
3. Brighten Up: Summer Decor
If you decide to proceed with a subject-free offer with your real estate agent, consider these steps to mitigate risks:
You may have a good eye for décor and love the layout of your potential new home, but what is under the surface is typically where headaches can lie. We have all heard the expression “don’t judge a book by its cover”, so why would you make the most important purchase in your life without checking it out?
Another benefit of having a home inspection is not only to find issues but also to confirm structural integrity. During an inspection, the inspector will review everything from the attic to the furthest reaches of the basement and will look for things like mould, holes in the chimney, saggy beams or improper wiring.
A home is an ongoing expense, much like a car. Unless it is brand new, there will be regular maintenance and updates required to replace things when they become old and inefficient. For instance, water heaters typically last for 6-10 years, the life of a good roof is around 20 years, while furnaces can last up to 25 years. The home inspection report will include an estimate on the remaining life for each of these big-ticket items, which will give you a heads up on future expected costs and provide you time to save for their eventual replacement.
Only required when you are putting down less than 20% for your downpayment. This is added to the total mortgage that you require and it is amortized over the life of your mortgage. This insurance protects the lender in case the borrower (you) defaults on the loan.
When you buy a house and get a mortgage, it is customary for real estate lawyers to be involved in the home buying process. You will want to start working with a real estate lawyer as soon as you want to sign an offer to purchase if you are buying a house. If you are doing a refinance you only need to see a real estate lawyer to sign the required document for the new mortgage. Lawyers will typically cost $1500 but it is best to talk to your lawyer and find out what their fees are.
This can sometimes be included in the lawyer fees or the lender fees. If it is not included in one of those fees, you’ll pay approximately $30 for a title search to be conducted. It is important to conduct a title search. A title search is important because it will make sure that the title is free and clear of any issues, such as liens. It will also ensure that the person selling you the home has the legal right to do so.