3 Reasons your Mortgage Falls Apart

Obtaining a mortgage can be a long and complicated process. It’s important to get pre-approved before you start your house hunting journey. While there is no guarantee of financing, there is pre-work that can be done to ensure that the process goes smoothly.

Three common reasons that I have seen why a mortgage can be declined or fall apart before closing.

1. Documentation does not match your story: The language of lenders is documentation. You need to provide a lot of documents to the lender to confirm everything about you. Your income, the source of your down payment, your identity, your credit worth, your assets, your debts, the property itself, etc. The list seems never ending. Things need to match. For example, if you say your income is $80,000 but the income documentation that you provide shows $76,000, this does not match. Income is a key determinant of how much mortgage amount you qualify for. Hence, lower documented income means lower qualified mortgage amount.

2. The appraisal falls short: The property value is the security for the mortgage. Lenders use the lower of the purchase price or the appraised value. For example, if your purchase price is $600,000 and the appraised value is $580,000, the lender will lend on $580,000, which means you will need to come up with $20,000 additional cash for the short fall.

3. You make changes to your financial situation before closing: Mortgage qualification is a snapshot of your financial situation at a given time. You do not want to make changes to your financial situation during the mortgage process. Mainly, you do not want to take on new debts that might affect your mortgage qualification. For example, if you qualify for a $750,000 and you get a new car loan two weeks before closing, this could drastically lower your mortgage qualification amount. Wait until the property closes before purchasing any new items.

It is very beneficial to work with an experienced mortgage broker that will ensure you don’t make these mistakes.

Contact Us

For more information on getting pre-approved, contact your local Ajax Mortgage Broker, Sean Stewart at 905-427-9596 or sean@seanastewart.com