[yousufj56]

I am hoping someone can provide a little clarity as we have been having contradictory information given by different mortgage specialists. My partner and I have been pre-approved for a mortgage, we are bidding on a condo tomorrow (Ontario), but I am starting a new job Dec 14, 2020.

Problem is, we have been pre-approved based on my old job (which was full time and well paid). My new job is a 1-yr contract that is higher paying and a more senior level at a similar pharmacy company. We are certain the contract will get renewed OR I can just go back to my old job easily.

After talking with some mortgage specialists, they say this can hamper our ability to get the actual money we have been pre-approved for in our bank account. If we are not able to get the money, our 31k deposit is lost.

What should we do? We have spoken with a number of brokers and mortgage specialists who give contradictory information (some say it is no problem because it is in the same field, and I have had a great income for the past 3+ years; others say since it is a contract role, we cannot get the mortgage even though it has been approved). They also said that the employment and income is verified when we are officially approved (not just pre-approved) AND when we close. We will be closing after I start my new job.

1) Do you guys recommend we forego the risk and continue renting?

2) Will we actually be rejected after being approved?

3) Should we make the closing date before I get the new job (so theoretically we don't have to tell the bank about the job switch at all)?

Please help! Thanks!

 

[Just a Guy]

Add a subject to financing as part of your offer then, if you don’t get financing they will return your deposit.

preapproval is basically meaningless as the bank is not bound by it. They are basically saying upon initial review it looks like we’d lend you x amount, but you still have to qualify.

to answer your questions, there is a small chance you won’t qualify, the clause will protect you. #3 is basically mortgage fraud, not a good idea to do that.

 

[yousufj56]

Add a subject to financing as part of your offer then, if you don’t get financing they will return your deposit.

preapproval is basically meaningless as the bank is not bound by it. They are basically saying upon initial review it looks like we’d lend you x amount, but you still have to qualify.

to answer your questions, there is a small chance you won’t qualify, the clause will protect you. #3 is basically mortgage fraud, not a good idea to do that.

Our concern is that they may approve everything initially, then the underwriter rejects it (after the 5 days conditional clause) OR the bank rejects it upon closing even though we were upfront with them.

Maybe a better question is that can they reject even after an initial approval from the bank?

 

[Just a Guy]

Once the bank approves the mortgage and sends you or, more specifically your lawyer, the confirmation they won’t go back on it. You’re overthinking this.

 

[Money172375]

Our concern is that they may approve everything initially, then the underwriter rejects it (after the 5 days conditional clause) OR the bank rejects it upon closing even though we were upfront with them.

Maybe a better question is that can they reject even after an initial approval from the bank?

There is no follow up at closing from the bank. As JAG said, put A 5-7 day condition of financing on the offer. Get the bank to approve you and ask for a firm and final approval in writing.

 

[STech]

There is no follow up at closing from the bank. As JAG said, put A 5-7 day condition of financing on the offer. Get the bank to approve you and ask for a firm and final approval in writing.

Good luck with that.

Your run of the mill pre-approval is just a generic calculator that tells you how much you can qualify for. It's more accurately known as a rate hold, because that's what it is.
An approval will not be granted until all documents are reviewed and verified, employers are contacted, and very importantly, the property is viewed, and possibly appraised. Then the lawyer gets instructed and has to satisfy the rest of the conditions, THEN you're finally approved. This happens well past the 5 or 7 days of the financing condition.
And yes, any lender has the right to do a look back even days before closing, even after approval and lawyer work. It definitely doesn't happen all the time, but especially during COVID, lenders have called and verified employment just days before it was all set and done. Does it happen? It most certainly does, and can be as late the morning you're expecting keys in your hand.

Everything is spelled out clearly in all the fine prints.

 

[Money172375]

Good luck with that.

Your run of the mill pre-approval is just a generic calculator that tells you how much you can qualify for. It's more accurately known as a rate hold, because that's what it is.
An approval will not be granted until all documents are reviewed and verified, employers are contacted, and very importantly, the property is viewed, and possibly appraised. Then the lawyer gets instructed and has to satisfy the rest of the conditions, THEN you're finally approved. This happens well past the 5 or 7 days of the financing condition.
And yes, any lender has the right to do a look back even days before closing, even after approval and lawyer work. It definitely doesn't happen all the time, but especially during COVID, lenders have called and verified employment just days before it was all set and done. Does it happen? It most certainly does, and can be as late the morning you're expecting keys in your hand.

Everything is spelled out clearly in all the fine prints.

I was a mortgage lender for 20 years and I never once saw, or heard, of your experience. Adjudication of income and employment checks along with appraisals all happened within 5 business days. At that time, we issued an approval certificate. This is what allows the buyer to waive the COF. In your scenario, there’s no value in a condition of financing at all. Unless you’re asking for the condition to be valid until the day of closing.
I’m sure there are very rare occurrences of what you describe, but it’s not the norm in 99% of applications. Every client who has gone through the credit adjudication and appraisal waives the condition. Nobody waits for the lawyer to fulfill their instructions.

 

[Mortgage u/w]

You will be fine. If you have good credit and your overall profile is strong, any lender will do the exception to accept your new employment situation.

As for your offer, ensure you are conditional to financing so this will cover you should anything go wrong.

And your pre-approval - all you did is reserve a rate. The real underwriting will occur once you submit a live deal and support it with your income docs, purchase offer, etc.

And please, under no circumstance should you lie about your situation. This is fraud and could prevent you from obtaining a mortgage in the future.

 

[STech]

I was a mortgage lender for 20 years and I never once saw, or heard, of your experience. Adjudication of income and employment checks along with appraisals all happened within 5 business days. At that time, we issued an approval certificate. This is what allows the buyer to waive the COF. In your scenario, there’s no value in a condition of financing at all. Unless you’re asking for the condition to be valid until the day of closing.
I’m sure there are very rare occurrences of what you describe, but it’s not the norm in 99% of applications. Every client who has gone through the credit adjudication and appraisal waives the condition. Nobody waits for the lawyer to fulfill their instructions.

Then you ought to know the commitment letter, as it's known now, is full of conditions to be satisfied still. And there's no such as thing as "firm and final approval in writing". And believe it or not, some lenders are so swamped, doc review happens outside of the COF. This is why I agree with Mortgage U/W, disclose it and sleep easy. If they'll make the exception for the new employment, you're good to go. If not, you didn't lose your deposit or committed to buying a house you don't have the cash for.

Every lender is free to set their own policy on spot audits before funding. How and when they're done? No idea, but it does happen.

 

[yousufj56]

Thanks for all your help! I have disclosed it to a couple different mortgage specialists and they have confirmed that it will be fine and they will not recheck employment after it has been officially approved. I can sleep easy now! Much obliged.

 

[Mortgage u/w]

Thanks for all your help! I have disclosed it to a couple different mortgage specialists and they have confirmed that it will be fine and they will not recheck employment after it has been officially approved. I can sleep easy now! Much obliged.

I assume your new employment only will be checked since no verifications were done with your pre-approval. I will also assume that if they do an employment check of your previous employment, the employer will disclose that you no longer work there.

As I mentioned, ensure you disclose ALL information. Having the lender check your previous employment and finding out you have a new job is considered withholding of information and can hinder you application.

 

[Money172375]

Our pre-approvals at TD did include a complete employment and credit history review. Only thing it left out was the property review. Years ago, it was just a simple “affordability” calculation, but in my last few years ago, the validity of a pre-approval became much stronger once we started reviewing and verifying all the customers details and information as part of the pre-app.

 

[Mortgage u/w]

Our pre-approvals at TD did include a complete employment and credit history review. Only thing it left out was the property review. Years ago, it was just a simple “affordability” calculation, but in my last few years ago, the validity of a pre-approval became much stronger once we started reviewing and verifying all the customers details and information as part of the pre-app.

You are correct that the preapprovals nowadays are getting underwritten with more scrutiny. However, more and more lenders are actually calling the employers. Those that do, will call once the deal goes 'live'.