January 28, 2016 | Buyers

Buyers Don’t Need to Worry if They Have Been Pre-approved …WRONG

MYTH: Once you have been Pre-approved you no longer have to worry about financing.

Approval comes in 3 stages of the mortgage approval process, including:

Pre-qualified

When you speak with a broker or a bank and fill out an application stating your income, assets and liabilities. The broker has not reviewed any supporting documents or even ran a credit check. The broker gives you a ballpark based off the information you have provided. There is no commitment or guarantee that you actually qualify for that amount.

Pre-approved

You have filled out an application, and the mortgage broker has run a credit check. You may or may not have provided them with documentation proving employment. The lender at this point is fairly confident you will get approved, however there is no guarantee (Except for a few institutions). This is as far as you can go prior to having an accepted offer on a house.

Approved

The final step of the mortgage approval process. A mortgage broker has studied your information and given you an estimate of how much you can borrow. Basically they will look at your credit score, your assets and your job. The broker has reviewed your estimate and has agreed to provide funds at a set rate and you have met the conditions of the contract.

Even in the case of being approved, you still have to maintain the same financial standing until closing.

Things to avoid after being approved:

  • Changing Jobs: Most of the time when you change a job there is a minimum time requirement you have to be at the new job before you will qualify. There are exceptions to the rule depending on your occupation.
  • Co-signing for a loan: When you co-sign a loan the bank looks at it as if you have taken out the loan yourself. This will raise your Total Debt Service Ratio, which means you may no longer qualify.
  • Buying big ticket items like a car, major appliances or expensive furniture: This will also increase your debt and may cause you not to qualify.
  • Don’t miss a credit card payment: this will increase your debt
  • Don’t forget to pay all parking tickets

Basically try to avoid anything that will raise your debt.

As a rule, check with your realtor before making any major purchase or changing your financial situation before closing.

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