Social media, your mortgage

Theme of the week: provide accurate information to your mortgage broker (or banker).

I am fortunate because my clients are very comfortable talking to me.

I’ve raised three kids, so sometimes my keenly developed spidey-sense goes into over-drive when I feel I’m not getting the whole story.

When I take an application from a client, I do background research to confirm what they are telling me is accurate. I gather documentation to demonstrate income and down payment.

I also look to see that there are no skeletons in the closet.

With technology today, information is readily available about many aspects of our lives. Sometimes more information than is helpful.

Two years ago I was working with clients up north.  Their’s was a beautiful application – clean credit, both had been with their respective employers for almost ten years, and their down payment was coming from the sale of their current home.

As a broker, I was thrilled. We had an approval immediately, all conditions signed off, and the lender sent mortgage instructions to the lawyer.

One week, one week! before closing, I had a panicked call from the lawyer who the lender had cancelled the mortgage commitment. While I was still trying to wrap my head around this, the lender’s number came up on my call display.

Apparently, while they were doing a final review and sign off, the lender came across court records from 1997 (almost twenty years prior) that showed the wife had been charged with a criminal act.

The wife was never convicted and the charges were dropped.

Regardless, the lender was concerned enough that they cancelled the financing that had been approved and ready to go for over a month.

• Was the wife currently involved in illegal activities?
• Was this a fair action on the part of the lender?
• Should she be penalized for things that happened 20 years ago?

From my perspective (and theirs obviously), the answer was no.

I’ve heard stories from other brokers about similar situations. In one situation, clients were in the process of refinancing their home. When the appraisal was reviewed by the lender, they noticed pot plants growing in the garden.

 As the story goes, the client had posted pictures all over Facebook that showed a lavish life style and a great deal of partying. My guess is the lender had concerns that the client might end up in trouble.

Financing was cancelled by this lender as well.

I’ve heard of situations where clients purchased a new vehicle or furniture the week or two before their mortgage was supposed to finalize.

In some of these cases the clients found themselves in a pickle because the lender did a quick review and discovered that debt servicing didn’t work with the new payments included.

Many people don’t realize that lenders may do a final review shortly before the closing date. This could include pulling an updated credit report.

If you are in the process of buying a new home or re-financing your current home, its important to remember that your application has been approved based on what you told your mortgage broker initially.

Should you be thinking of making any significant changes to your situation, it is critical that you advise your mortgage broker before you do.

For instance, let’s say that you wrote an offer to purchase with a closing date in December. A month before it closes, you are offered a better job with a large increase in pay.

It would make sense to change jobs because, after all, you will be making more money and are therefore better able to pay your mortgage.

However, this could potentially jeopardize your mortgage approval.

My understanding is that in B.C., there is a mandatory three-month probation period with a new employer. Your lender approved your mortgage based on your employment history. Presumably you were already through a probation period at your current job.

This could raise flags. If you are changing industries, the lender might be concerned about your stability. If you are staying within the same industry, the lender may be completely fine with the change.

The important message is that you keep your mortgage broker in the loop so that they can make sure you are not risking your financing.

The fine-print of mortgage approvals includes wording such that should the lender learn about material changes to your circumstances they are able to cancel your approval. This is not a situation you ever want to find yourself in a week before closing.

Be upfront with your mortgage broker about your circumstances, and if you are considering making a change let them know as soon as possible. Most situations can be managed ahead of time to avoid uncomfortable surprises prior to closing.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.