Mike's Spruce Grove Mortgage Blog

Don't buy a big ticket item right after your mortgage was approved Wednesday, May 1, 2019

Don't buy a big ticket item, right after your mortgage was approved

Part of the service offered by a mortgage broker is the free guidance that we offer. 

Here is an example of something that may be very obvious to somebody who has worked in the credit industry, most of our lives but would be a deal killer without the proper advice.

Your approval was made with a very specific mathematical formula, based on your income vs your expenses.  Your mortgage is not officially finalized until it is actually advanced to your lawyer's office. That does not happen until closing day.  If you go and make any large ticket purchase that includes the need for credit, you will change the calculations of your Total Debt Servicing Ratio (TDSR).

The lender may pull a credit bureau, just prior to the advancement of funds. If they see a credit inquiry, they will definitely ask if there has been a change to the financial obligations of the borrower.  Your lender is under a very strict set of CMHC guidelines to ensure that the deal they provided for mortgage insurance approval is the same deal on the date of funding. 

If you do make a purchase and if it does put your TDSR over the top, you may find yourself in a very awkward position. No lender and about to lose your entire down payment.   You might find yourself trying to negotiate a return of your car, so you don't lose your chance of being a home owner.

Some will already know how the credit works, so this would be pretty obvious, but I can say that I have had some near show-stopping transactions over my 35+ year career.

posted by MIke Toporowsky at 1:07 pm

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