After you’re pre-approved for a mortgage loan, any drastic changes to your credit score, debt and income can quickly derail the process.
When possible, we suggest our buyers avoid job changes, making big purchases and opening new lines of credit until after their loan closes.
If you’re interested in buying a new home or refinancing your current mortgage – and you’re contemplating a career change – here are a few things you should know.
Before Applying for a Mortgage
Sometimes, job changes are unavoidable. If you’re on the hunt for a new job, for one reason or another, we recommend that you get settled before applying for a mortgage.
You’ll be asked to submit pay stubs for approval, so it’s best to wait 30 days before reaching out to a lender about financing. Most jobs changes should not impact your mortgage application if you haven’t applied for a mortgage yet.
According to industry experts, “You still need income that is reliable, stable and likely to continue in the future. And your new job should be an upward – or at least lateral – move within the same industry. As long as those criteria are met, changing jobs before you buy a house shouldn’t be a problem.”
While You’re in Process
When you apply for a mortgage, you’re approved based on the information you submit. If anything changes throughout the process – your income, debts, assets – please let your Loan Officer know immediately.
When you change jobs applying for a loan, we will have to start over again at the beginning. New documentation will need to be collected and your debt-to-income will need to be recalculated.
Best case scenario, you’re approved based on your new job after a short delay.
Worst case scenario, you’re denied based on your rate of pay or pay structure.
After the Loan Closes
After your loan closes, and you have the keys for your new home in hand, you’re free to change jobs. We will not reopen your loan or verify your income unless you reach out about refinancing in the future.
Your job change may impact your ability to refinance at a later date, but we can tackle that when the time is right.
Other Factors to Consider
Promotions: If you receive a promotion from your current company while in process, no need to worry! If your salaried or hourly rate-of-pay is increasing, and your pay structure is not changing, a promotion will likely increase your buying power.
Changes in Pay Structure: Commissioned employees may have the ability to earn more, but this pay structure can also complicate the mortgage process. Often times, commission pay cannot be counted as income unless it has been received for 12-24 months. The same is true for bonuses received.
If you have additional questions about your employment status and its impact on the mortgage process, give us a call. We’re happy to help in any way we can!