Selecting Real Estate

When many people start looking for a new home, they wonder what they should choose and how much of an investment it will be. Although many people aren't quite sure about what their new home will look like, the fact of the matter is that there are many aspects to be mindful of when it comes to real estate. From paying attention to how much things cost to looking carefully at your options, it really pays to understand and apply a little wisdom before you break ground on a project. Check out these posts to find out great tips about real estate.

Is It True Your Mortgage Application Can Be Denied If You Change Jobs?

Real Estate Blog

Changing jobs can be a good thing, especially if you'll be making more money or receiving better benefits and opportunities. However, the timing of such a change can be highly problematic if you're trying to buy a house because it will make lenders think your employment or income is unstable. Here's what you need to know about this issue to ensure your job hopping won't hurt your chances of getting a mortgage.

Lenders Want to Make Sure You Can Still Pay

Banks want to make sure they will get their money back plus interest, which is why they typically require applicants have a minimum of two years of work history and assurances that employment will continue to be approved for mortgages. It makes banks nervous when applicants switch jobs in the middle of the process because lenders think the move will have a negative impact on applicants' ability to make the house payments, particularly if the new job means less income.

As a result, it's not unusual for banks to deny someone's application for a mortgage (or rescind any offers made) when the person changes jobs, even if it seemed like an approval was imminent. Unfortunately, until you sign the loan contract, the bank can change its mind at any time and choose not to finance your purchase for any reason.

Convincing the Bank to Stay the Course

Changing jobs doesn't mean you have to give up on buying a home. Rather, you'll need to reassure the bank that you're still able to make the monthly payments and that your new position and income will remain stable for the next few years. There are several ways you can accomplish this:

  • Submit a copy of your employment contract showing your new title, your pay, and the number of years the contract is valid
  • Furnish a copy of your offer letter from the new company
  • Show you're making a lateral move within the same industry (i.e. it's the same type of work, just with a different company)
  • Have your employer fill out a verification of employment showing your income has increased and your expected employment lifespan

Regrettably, if your new job came with less pay, an unfavorable change in pay structure (e.g. from salary to commissions), or a switch from employee to independent contractor, then you may have to put your home buying on hold. Banks do not like these types of job changes and will likely deny your application if they occur to you. You may have to spend another two years building up history with your new company before you will be approved for your dream home.

For more information about changing jobs while buying a home or help in finding a home for sale, contact a real estate agent.


26 February 2020