Mortgage Pre-Approval Mistakes That Could Cost You Your Dream Home
Getting pre-approved for a mortgage is an exciting step toward homeownership. It shows sellers you’re a serious buyer and gives you a clear idea of what you can afford. However, many people don’t realize that their mortgage pre-approval isn’t set in stone. Certain actions can derail the process, leaving you scrambling to secure financing at the last minute. Here are some common mistakes that can ruin your pre-approval in Alberta—and how to avoid them.
1. Taking on New Debt
One of the biggest mistakes you can make after getting pre-approved is taking on additional debt. Whether it’s a new car loan, financing furniture, or maxing out your credit cards, any increase in debt can change your debt-to-income ratio and impact your mortgage eligibility.
What to do instead: Avoid major purchases until after you’ve closed on your home. If a large expense is necessary, consult with your mortgage advisor first.
2. Missing or Late Payments
Your credit score plays a huge role in mortgage approval. Even a single missed or late payment on a credit card, loan, or utility bill can lower your credit score and make lenders reconsider your approval.
What to do instead: Set up automatic payments or reminders to ensure you never miss a due date.
3. Changing Jobs or Income Sources
Lenders want to see stability in your employment and income. Changing jobs, switching from salaried to commission-based pay, or becoming self-employed can raise red flags and jeopardize your approval.
What to do instead: If possible, wait until after your mortgage has been finalized before making any career moves. If a job change is unavoidable, notify your lender as soon as possible.
4. Making Large Bank Deposits Without Documentation
Sudden, unexplained bank deposits can be a red flag for lenders. They may suspect you’ve taken on undisclosed debt or received funds that could complicate your financial situation.
What to do instead: Keep records of any large deposits and be prepared to explain their sources. Gifts from family members for down payments should be properly documented.
5. Co-Signing Loans for Others
When you co-sign a loan, you’re legally responsible for the debt if the primary borrower defaults. Lenders will factor this obligation into your debt-to-income ratio, which can affect your mortgage approval.
What to do instead: If possible, avoid co-signing any loans until after your mortgage is secured.
6. Shopping Around for Credit Too Much
Multiple credit inquiries within a short period can lower your credit score. Applying for new credit cards or loans while securing a mortgage can raise concerns for lenders.
What to do instead: Limit new credit applications until after your mortgage closes.
7. Not Keeping in Touch with Your Lender
If your financial situation changes—whether it’s an increase in debt, a job switch, or a large deposit—your lender needs to know. Keeping them in the loop ensures you’re prepared for any adjustments that may be needed.
What to do instead: Maintain open communication with your mortgage broker or lender throughout the process.
Final Thoughts
Your mortgage pre-approval is based on your current financial situation, and any significant changes can affect your ability to secure financing. The key take away is to wait until after your mortgage has been finalized – or better yet, wait until you have moved before making any significant purchases or changes. By avoiding these common mistakes, you can ensure a smooth path to homeownership in Alberta.
Are you preparing to buy a home? CONTACT US
Contact Tanya and Kelly with Urban Haven Real Estate Group at CIR Realty
587-415-1705 or urbanhavengroup@gmail.com