Upper Dublin, Blue Bell and Horsham Real Estate and Homes for Sale in PennsylvaniaHome
When supplying information for a mortgage application it is imperative that you are completely honest. Today lender’s are running your credit at several stages of the loan process, not just at the initial application. Changes in employment, income, debt and your credit score may have a negative affect on your ability to obtain a mortgage. When looking to purchase a new home, it is important not to make large purchases, like buying or leasing a new car, opening new credit cards and changing jobs until you have made settlement on your new home.
How Changing Jobs Affects Buying a Home
For most people, changing employers will not really affect your ability to qualify for a mortgage loan, especially if you are going to be earning more money. For some home buyers, however, the effects of changing jobs can be disastrous to your loan application.
If you’re a salaried employee who does not earn additional income from commissions, bonuses, or over-time, switching employers should not create a problem. Just make sure to remain in the same line of work. Hopefully, you will be earning a higher salary, which will help you better qualify for a mortgage.
If your income is based on hourly wages and you work a straight forty hours a week without over-time, changing jobs should not create any problems.
If a substantial portion of your income is derived from commissions, you should not change jobs before buying a home. This has to do with how mortgage lenders calculate your income. They average your commissions over the last two years.
Changing employers creates an uncertainty about your future earnings from commissions. There is no track record from which to produce an average. Even if you are selling the same type of product with essentially the same commission structure, the mortgage underwriter cannot be certain that past earnings will accurately reflect future earnings.
If a substantial portion of your income on the new job will come from bonuses, you may want to consider delaying an employment change. Mortgage lenders will rarely consider future bonuses as income unless you have been on the same job for two years and have a track record of receiving those bonuses. Then they will average your bonuses over the last two years in calculating your income. They want documentation of those years, so starting a new job with out bonus history will not suffice.
If you earn an hourly income but rarely work forty hours a week, you should not change jobs. There would not be a way to tell how many hours you will work each week on the new job, the lender needs to be able to accurately calculate your income.
Since all employers award overtime hours differently, your overtime income cannot be determined if you change jobs. If you stay on your present job, your lender will give you credit for overtime income. They will determine your overtime earnings over the last two years, then calculate a monthly average.
If you are considering a change to self-employment before buying a new home, don’t do it. Buy the home first.
Lenders like to see a two-year track record of self-employment income when approving a loan. Plus, self-employed individuals tend to include a lot of expenses on the Schedule C of their tax returns, especially in the early years of self-employment. While this minimizes your tax obligation to the IRS, it also minimizes your income to qualify for a home loan.
If you are considering changing your business from a sole proprietorship to a partnership or corporation, you should also delay that until you purchase your new home.
If you will be receiving gift money from a family member to assist you in the purchase of your home there are several things you need to know.
The person giving the ‘gift’ has to show bank statements showing that the funds have been in their account. They must document the withdrawal of those funds and you have to document the deposit of those funds into your account. Usually the lender requires a ‘gift letter’, stating that the funds are in fact a ‘gift’.
I will walk you through all the steps necessary to obtain a mortgage as well as follow through that all documents are done in a timely manor.
As your buyer agent communication and organization are key to getting through this process, ensuring that all appropriate documents will be ready for a smooth settlement.
This is a win – win – relationship!
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