Things not to do between your pre-approval and possession day

A mortgage pre-approval is not a promise. It tells you roughly what a lender will lend based on what you told them that day, and the final approval comes later, once they have your documents and have checked the property. Between the pre-approval and possession, the things you do with your job, your debt and your bank account can change the answer. Most of the deals we see wobble in Edmonton do not fall apart over the house. They fall apart over something the buyer did in the weeks before.

Don't change jobs

Lenders look at what you earn and how long you have been in your position. A new job, even a better-paying one, can mean a probation period the lender will not count, and a move to self-employment usually means they want two years of tax assessments. If a change is coming, tell your mortgage specialist before you accept it, not after.

Don't take on new debt

Financing a vehicle, opening a credit card or putting furniture on a payment plan raises your monthly obligations and can shrink what you qualify for. So can co-signing someone else's loan, because the lender counts it as your debt. Wait until after possession.

Don't move money around without a paper trail

Your lender will want statements showing where your down payment and closing costs came from. Large cash deposits, money moved between several accounts or a last-minute transfer from family all need to be explained, sometimes with a signed gift letter. Leave the money where it is and keep the statements.

Don't let your rate hold expire

A pre-approved rate is usually held for 60 to 130 days, depending on the lender. If your search runs longer, ask whether it can be extended, and make sure you know what rate you would qualify at if it is not.

Don't waive conditions to win

In a competitive situation, it is tempting to drop the financing or inspection condition. Without a financing condition, you are committed to close even if the lender's appraisal comes in low or the final approval falls through, and you can lose your deposit. Without an inspection, you take on whatever the house is hiding. Shorter condition dates are often a safer way to make an offer stronger than removing a condition altogether.

Don't skip the paperwork that is specific to the home

• Condo or townhouse: read the condominium documents, including the reserve fund, the bylaws and the minutes, for special assessments or disputes. We review them with you during the condition period.
• House: check the Real Property Report. A garage, deck or fence that is not shown as compliant is a problem the seller should fix before possession, not one you inherit. Our article on title insurance and Real Property Reports explains why.

Don't forget the closing costs

Alberta has no land transfer tax, but you still pay Land Titles fees to register the transfer and the mortgage, your lawyer, the inspection and moving costs, plus any property tax and condo fee adjustments. Your lender will want to see that money too.

Do keep everyone in the loop

If anything changes, from your job to the closing date you need, tell your mortgage specialist and your REALTOR® right away. Almost everything can be worked around if we hear about it early.

Buying soon? We will walk you through each step and the dates that matter in your contract. Start with the Home Matchmaker or get in touch.

Sources

• Financial Consumer Agency of Canada, Getting a mortgage pre-approval (what lenders check, and rate holds of 60 to 130 days)
• Office of the Superintendent of Financial Institutions, Minimum qualifying rate for uninsured mortgages
• Bennett Jones, Increases to Alberta land transfer and mortgage registration fees