Avoidable mistakes that can affect your approval for a mortgage

With the climbing interest rates, it may be more difficult to qualify for a mortgage for some Canadians who are planning on buying a home, especially those who are first-time homebuyers. Some common mortgage hazards to avoid include:

Not being able to prove what’s originally disclosed to the lenders: If a buyer is pre-approved for a certain amount based on original information that is disclosed, and then the buyer cannot verify the information that was originally disclosed (such as income) then the pre-approved amount may be voided.

Support payment information: If the borrower is divorced and pays child support or spousal support, these payments affect the borrower’s income and must be disclosed by providing the lender with a copy of the separation amount as these payments can technically lower the original stated income of the borrower.

A falling credit score: Even if a borrower is approved for a mortgage, the lender may still run a credit check before the closing date. If the borrower’s credit score has fallen, the mortgage company is entitled to not provide the agreed amount. Missing payments on credit cards and applying for new credit (where a company runs a credit check) can all lower credit scores, as can carrying a balance on any existing forms of credit. Obtaining your credit report will show you any prior missed payments and your score is usually available for an additional fee. This will also provide you with a chance to fix any mistakes on your credit report, and errors on credit reports are much more common than some people might realize.

Every Canadian is entitled to one free credit report per year by mail, and alternatively one can pay a small fee online to see their credit report. Avoid any web site promising a free credit report, no matter how catchy their commercials might be.

Some lenders may also approve a lender without checking for a credit report first, but then decline the borrower later on after pulling the report and discovering a poor credit score.