Job Related Incidences That Can Affect Your Home Mortgage Loan
Having a steady and decent paying job helps when you’re applying for a home loan, but there are other factors that will affect the cost of your mortgage loan– such as the details of your financial history and current employment. If you’re considering about applying for a mortgage, here’s what you need to know:
What to Expect.
When a lender looks over your loan application, they focus on three aspects of your income: the amount, the history, and how stable it has been. Typically, lenders ask for your job history over the last two years, and look at any employment gaps, or changes in income. Lenders study your work experience in two year increments because that’s a sufficient amount of time needed to evaluate how steady your income is. When you apply for a home loan, expect to provide the start date of your current job, an offer letter with compensation, and multiple pay stubs.
Stick to the same job.
Switching jobs within the two years prior to applying for a loan can potentially cost you a home loan; especially if the new job is in a completely different field than your previous one. If you happen to have switched jobs within the last two years within the same line of work but receive a lower income, the mortgage will be based on the income most up to date. Getting a new job can also effect your tax information, especially if you switched over at the end of the year. Any amount of time between jobs can work against you, as it doesn’t display a steady flow of income. If you are planning on changing careers anytime soon, it’s probably best to wait until after you receive your mortgage, and know you can handle the payments.
If you have to change jobs upon applying for a home loan for whatever reason, it doesn’t necessarily mean it’s impossible to get a home loan; but it will make the road to finding the right mortgage a little bumpier than you’d like. If you know buying a home is in the near future, do everything you can to stick to the same job you’ve had, and wait until things settle down before switching to a new one.
What if you lose your job during the house-buying process?
Sometimes life can throw you some unexpected curve-balls: like loosing your job during the house-hunting process or worse– losing it while your home is in escrow. If you happen to become unemployed unexpectedly while house-hunting, it’s probably smart to put off looking until you find a stable job. But what happens if your home is in escrow and you have to back out because you no longer qualify for a loan due to your sudden unemployment? The answer depends on your unique situation. Depending on where you are in the escrow process, you may be able to salvage your deposit. Be sure to go over all of your options with your real estate agent and figure out what makes the most sense for your financial situation.
Have you ever taken on a new job just before applying for a home loan? Let us know what happened in the comments below!