If you’re about to switch jobs while you have a home loan application in progress, have no fear as long as you keep your lender informed. Be straightforward with your lender about change of jobs or pay structures and are able to submit relevant paperwork, then you will likely still be eligible for a mortgage.
Always The Fair Weather Friend
The reason lenders are wary about changing jobs is simply because they are unsure about an individual’s future income based on their current income. Another reason is that borrowers who switch jobs often don’t have enough paperwork to vouch for their financial stability.
The types of borrowers that are considered high risk to lenders include borrowers who don’t have consistent work histories, who have changed their pay structure, such as from salary to commission and those who’ve changed careers.
Don’t let this discourage you and have you continue to rent a home, because fact is that buying a home is considerably cheaper than renting, about 35 to 38 percent cheaper. So instead of putting your home buying dreams on hold, why not explore your options so here are a few to get on the right track.
Keep Your Lenders Informed On New Job Prospects
If you’re expecting a job change, while your mortgage is being processed, keep your lender in the loop so that they can work with you to guide you on the right track. As you settle into your new job, keep your lender posted by sending in any relevant documents with regards to your new job.
When you sign a new job offer, send that into your lender and even when you receive your new compensation package. You will have to keep your lender informed on any changes as you get closer to the settlement so the sooner you do it, the better and easier it is.
Speed Up Your Paperwork Preparation
While it is important to keep your paperwork in order, it is especially important if you’re going through income and job changes. Income proof is the most important piece of paper work for lenders so it is important that you keep those first pay stubs safe and handy in order to continue to meet your lender’s requirements.
Getting Your Employer’s Recommendation
Along with getting a recommendation letter from your previous employer, it is highly recommended that you seek one from your new employer as well. Getting a letter from your existing employer proves particularly useful if you switch from a salary based pay to a commission based position.
Your lenders will feel more comfortable knowing that your boss works in the same structure and you still draw healthy paychecks. This current employer recommendation letter can also include the fact that your employer expects you to stick around for a while.