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11/17/11

Mortgage Qualification Risks

Q - Can a mortgage approval be withdrawn before the completion date?

A - It is possible for a lending institution to withdraw mortgage approval. 

Let's first determine if you had approval in the first place.  You provided  your financial institution all your pertinent documentation such as income, assets and debts.  This information was processed and it fell within the institution's lending criteria.  A credit check was done and it too was satisfactory.  Given all this, you would then be approved for a mortgage. 

It is at this point that you should be requesting to have this information in writing.  Experienced real estate agents will always request to have this approval in writing prior to removing the financing condition.  It is a precaution and a means of protecting the buyer.  On rare occasions, a mortgage broker may be very busy and assume that approval will be forthcoming without totally processing all the information.  In those rare instances, having written proof from the financial institution's representative is important.

You now have mortgage approval in writing and feel secure that the financing for your home is in place.  You then decide that you will purchase new appliances for your home and some additional furnishings and charge them to your credit card.  These are major purchases and will impact your financial situation.  This is particularly true if your approval was somewhat on the cusp of approval/disapproval. 

Institutions sometimes do a last check prior to actually releasing the funds.  Charging such major purchases and increasing the debt load can significantly alter your finacial position and you could be risking your mortgage qualification.  



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