Pre – Approval isn’t always set in stone

Pre-Approved

Getting pre-approved for a mortgage is a great first step in buying a new home. Meeting with your bank or broker first will help you identify what you can afford and keep your search within your means.

But sometimes even a pre-approved mortgage will fall through.

Your mortgage approval is based on your current income and employment status, debt and credit rating. If any of these change, you run the risk of being declined.

For example, if you purchased a big-ticket item like a car or boat with a large loan, the increased debt load would impact on your chances for keeping that pre-approval.

What if you decided to make that big career change? Chances are, your lender would have concerns about the sudden employment status change and corresponding salary adjustment. If you have career plans in the works, check what effect it may have on your mortgage approval before making the leap.

A credit-rating change – like defaulting on a loan or missing bill payments – also influences whether your mortgage approval will be revoked. Most lenders have strict approval cut-off points based on credit scores, so even a minor change might be enough to trigger a decline. When in doubt, check with one of the two credit-reporting agencies – Equifax or TransUnion. Identity theft also can have a huge effect on your credit history.

Other issues include lender policy changes. A policy change regarding credit score or length of employment, for example, could be applied retroactively and your pre-approved mortgage suddenly won’t be. Or, perhaps the home you’ve chosen is appraised significantly lower than your offer. The lender won’t extend the mortgage to cover this risk.

When in doubt, it’s worth having a chat with your lender before the heartbreak of losing your dream home when your pre-approval falls through.

Jennifer Birch – The Property Partner

3 Tips to Conquering Home Buyer Indecision

new apartment

In a market of opportunity, deciding to purchase a new home can offer you more choices than you initially expected. A successful home purchase is one that both your head and your heart agree on. Often a difficult task, it’s a wonderful feeling when you finally find the perfect place to call home. But what if you fall in love with every house you see? How do you know which one to put an offer on?

Emotional Swaying – The first thing to know is that this is normal and even common for new homebuyers. Purchasing a home is likely the biggest purchase you will ever make, and it is a difficult decision. The key is to invest the time needed to ensure you are making the best decision for you, your family and your financial situation.

Wants vs. Needs – Writing and rewriting a list of essentials, followed by a list of hopefuls is a great way to feel confident about your purchase. Be conscious not only of your current expectations, but also what may become more important to you in the future. Be picky and be thorough. This is a large purchase so don’t let anyone try to pressure or sway you.

Evaluate the Extras – If more than one home meets your rigid criteria, compare the pros and cons of the added features. Consider commute times, yard sizes, proximity to schools, parks and shopping. Also weigh drawbacks of your neighbourhood choice. Fully understanding the implications of your choice will help you make the best decision.

If you find that you’re still having trouble deciding on a property, this may be a sign that you are not ready to commit to home ownership. Never make a home purchase you are not sure about. If you find you are unable to commit that to one purchase, it is wise to wait until you can.

Jennifer Birch – The Property Partner