Mortgage Blog
7 hacks every home buyer MUST learn before their mortgage closes
March 26, 2021 | Posted by: Debbie Belair
In our competitive market, the closing date and timelines are getting tighter and tighter. It's crucial that homebuyers understand what to do and, more importantly, what to avoid in the few short weeks or months between your mortgage approval and the date you take possession of your home.
Closing Day: Is the date you take possession of your home. The closing day is also when your lawyer gives your money to the seller, and the seller's lawyer releases the keys to your lawyer and finally, you. Your name, along with the lender's name, is registered on the title at the end of day on closing day.
Let's start at the beginning!
The offer on your dream home is accepted. Congratulations. Your mortgage financing is approved, hooray, and thank goodness. After providing me with what seemed like a mountain of paper and the never-ending requests for more information, you signed your mortgage paperwork and sighed with relief; you are all done. Bam.
Now, all you have to do is wait for the closing date. Or, buy a fancy car to go in your new driveway. Wrong!
7 hacks to avoid jeopardizing your purchase
Hack #1 – Don't absorb any new financial obligations
Keep your financial snapshot the same – What does this mean? Do not buy a new car. If something happens to your vehicle and you must purchase a car, call me.
Do not cancel/close any credit cards or loans, and whatever you do, don't spend your down payment before closing.
I used your current financial picture to apply for your mortgage with the lender. Your mortgage approval relies on your financial picture being truthful and remaining the same.
If your financial picture changes due to the loss of income or a costly and purchase(s), we will need to start the mortgage qualifying process again, which could mean higher interest rates, higher payments, and tighter cash-flow.
Car Tip: You can buy a new car without payments if you have the available funds in cash. Or you can wait until after you take possession of your home, and the cost will no longer interfere with qualifying.
Credit Tip: Paying your credit cards on time and in full is ideal but not always doable. Pay your minimum balance on time, every time.
Closing a credit account might seem like the right thing to do, but if that credit account is the cornerstone of your credit score, you may want to consult with an expert in credit, me, your mortgage broker. Let's choose the card(s) that won't cause a drop in your credit score.
Hack #2 – Get your documents in as quickly as possible
It isn't enough that you say you are a millionaire (wouldn't that be nice?) you must prove it. A letter of employment means nothing without a signature and a recent date. Don't be shy to ask HR for a new one; they have templates just for this reason. And, yes, a paystub is also required? Please don't shred your paystubs or financial documents leading up to your closing. In some cases (e.g., Covid times), as your closing date approaches, we will need to provide an updated paystub to prove that your income has continued and you have not experienced a drop in pay since your approval date.
Hack #3 – Do not redact anything
We can't use documents that have been blacked out or redacted. Why? To help our government prevent fraud and money laundering and protect Canada's housing market, we need to provide complete documentation under the AML - Anti Money Laundering Act. As your mortgage broker, I answer to a strict privacy policy, not only because it's ethical, but it's the law! So believe us when we say your financial secrets are safe with us.
Hack #4 – Choose one broker/agent and stick with them
It's normal and perfectly ok to interview brokers and bankers, but once you've found the one you want to work with, stop shopping. Why? There are several reasons; first, your credit bureau, Equifax, and Transunion will treat several pulls of your credit as one during a short period; the algorithm will recognize that you are shopping for a mortgage. But after that, you run the risk of lowering your score. Second: conflicting views and opinions can and will lead to confusion from misinformation. Don't confuse customer service with knowledge.
Consider this scenario. Your broker provides you with a mortgage approval with a well-known bank, and your partner decides to go into a retail branch of the same bank to see if they can get a better rate. Comparing may seem like a harmless avenue to take, but believe me when I say it can and will jeopardize your closing date.
Tip: If you're not ready to commit and are shopping around for the right, broker/banker, tell me. We can keep things light until you are prepared to commit to working with me. You will need to trust that I have your best interest at heart. I am working for you.
Hack #5 – Legal Matters: Get ahead of your signing appointment
In the week leading up to your closing or possession date, you may find yourself quite busy packing and preparing for move-in date. Understandable, but keep an eye on your phone and by all means check your voicemail. Lawyers are extremely busy and many only call once, especially in times of Covid where their offices have had to pivot to meet increased demand and the obligations involved without in-person signings. If you haven’t heard from them 3 days before your closing, reach out to them and your broker. One of the beauties of using a mortgage broker you trust, is we are the ones with a direct line to your lawyer and your lender to mitigate any risks associated when issues like this arise.
Tip: Look at your closing date and put a reminder in your calendar for 5 and 3 business days before closing. If you haven’t heard from your lawyer by then, get ahead and figure out why!
Hack #6 – Avoid ANY last minute changes
Anything last minute (2 weeks before closing or less) will jeopardize your closing date. Want to add a bit more to your down payment? Want to pay your realtor less/more because they’re a friend? Before considering any last minute changes to the biggest legal transaction of your life, speak to an expert (that’s us!) You may be disappointed, we will almost always advise against last minute changes. That said, we usually have an alternative solution if you loop us into the conversation early.
Hack #7 – Keeping job loss/change a secret from your broker/agent
In our current climate, this is pretty relevant. Our jobs are changing and morphing because society is pivoting to make sense of our new reality, a mostly virtual one. Do you remember that employment letter you submitted for your mortgage approval? Someone, a real person is actually calling the HR or manager who signed your letter to check that it still stands true. If you lose your job, it may not mean you lose your new house, take 3 deep breaths, then call me. What is certain, is I can’t help you if you don’t let me.
Tip: If you were full-time permanent for your mortgage approval and before your closing date you switch to contract or a new status, you may lose your mortgage approval. It depends on a variety of factors, so we absolutely need to chat ASAP!
It’s imperative that Canadian home buyers understand that while some of the journey is not within their control, many moving parts are! Pat yourself on the back because you’ve just taken a crash course in mortgages and now my wish is that you educate every home buyer you know with these 7 important hacks to avoid losing your dream home when it was oh so close within reach.
Keep this infographic handy and let's chat if you're worried about any of them!.png)