Starting unprepared:
It's never a good idea to look for a mortgage specialist after signing the purchase offer. Last minute borrowing is doable, but almost always costs you more money.
Rush mortgage applications may miss important details, and that could cause worse mortgage rates and terms.
When time is an issue, the inexperienced mortgage specialist may submit the application based on verbal information, especially regarding income. Mortgage approval will be based on the information on the application. If the documents you provided are not supportive, the lender can change its decision and decline a few days before the closing.
Not checking and fixing your credit
It is important to examine your credit reports carefully, because any mistakes – and they are depressingly common – could lead to a higher mortgage rate or even loan rejection.
Even your ex-partner’s credit score can wreck yours.
If possible, check your credit six months to a year before applying for a mortgage, to give yourself plenty of time to fix errors and make changes that will improve your score.
Checking your credit report with the major credit bureau – Equifax - can be done online at their web-site:
www.equifax.ca
Free credit monitoring services offered by CreditKarma give you access to snapshots of your credit bureau report.
Getting the new car lease (or other credit) before your mortgage is funded
The Mortgage lender can re-check your credit a few days before the closing, and the new Hammer you just leased, can ruin your mortgage application.
Dropping by too many banks
Every time you apply for various forms of credit, like credit cards, car leasing, or furniture store credit, lenders are pulling out your credit report. The score goes lower with every click.
So, when you go from bank to bank, don’t expect them to fancy you: Third or fourth visits can end up in being declined by all of them.
Overlooking mortgage conditions while searching for low interest rates
Canadian lenders display their mortgage rates in a matrix. The rates are different for insured, non-insured and insurable mortgages. It is not uncommon that the mortgage you wish to secure at a lower rate will come with unavoidable mortgage insurance. Even with a 20 % down payment, you can still incur a mortgage insurance premium, in order to secure a very low interest mortgage.
Relying too much on pre-approval
Pre-approval is technically pre-qualification, done by certain lenders, based on the info you provide. If your situation changes by the time you have a signed offer – the pre-approval can be canceled.
Changing jobs while shopping for a home
New employment will be considered only if it’s full-time employment past the probation period.
Also, do not change the type of employment: For example, don’t give up a full-time position to take a contract position (Self-employed), even if it is with the same employer.