Thursday, January 22, 2015

Vancouver Real Estate: 5 Mistakes That Could Mess Up Your Closing

Sitting on paperwork- I realize many people find paperwork boring, but when your mortgage broker requests copies of your tax returns or pay stubs or extra documentation on that rental property you own, please make that a priority. If you're going to be away without phone or email, tell your broker in advance and get him or her all the requested paperwork before you go.
Instructions for funding are not sent to the solicitor until all the conditions are satisfied. Some lenders take about 48 hours each time you submit a new document and want all the conditions satisfied five to seven days prior to the completion date.
Charging big-ticket items for your new home- Sometimes first-time buyers get excited about decorating their new house or condo and they'll go on a spending spree picking out new appliances and furniture before they even close. If you're putting all these purchases on a credit card, that could be a problem, because it boosts your credit utilization ratio. Your lender approved you based on the utilization ratio you had previously, so charging up a storm could raise some eyebrows. Best to wait until after closing.
Switching jobs- If you're getting a promotion or a new job within the same company, that's one thing. But switching to a completely new company could make your lender nervous, because they like to see a history of steady employment with one employer. Even if you'll make more money in your new job and you're prepared to show a new employment letter and pay stubs, it's still a bit of an unknown for your lender. Leaving your job to become an entrepreneur could be even more anxiety-inducing for lenders, because you don't have a track record yet.
Applying for new credit lines- Lenders review your credit report as part of the underwriting process, and they may check it again just before closing, so try to maintain the status quo. Applying for new credit lines such as auto loans, credit cards, or personal loans will temporarily lower your score, so try to avoid this until after closing. 
Depleting your savings- Your lender approved you based on the assets you had when you originally applied for the mortgage, and if a lender is giving an exception on debt ratios based on liquid assets, they may want confirmation that you still have those assets.
The bottom line? Try to keep your job and finances consistent with what they were when you originally applied for the mortgage. Last-minute surprises or missing paperwork could turn your closing day from an existing milestone to a stressful one.