Employment During Mortgage Approval Process
Income and employment is probably the most important factor, along with credit, in the mortgage approval process. Mortgage lenders want to be assured that you have stable income and stable employment and be assured that your income will likely continue for the next three years. That is the reason mortgage lenders want to see a two year employment history and stable income. A steady two year employment history with stable income is a good prediction that your income and employment will continue for the next three years. Unfortunately, this is not always the case for mortgage loan borrowers.
2 Year History: Employment During Mortgage Approval Process
Many mortgage loan borrowers think that they need a two year employment history with the same company with no gaps in employment during the two years. There are mortgage lenders who do have their own mortgage lender overlays and do require a two year consistent employment history with the same employer but this is not always the case. You can qualify for a residential mortgage loan with gaps in employment and multiple employers during the past two years. Here are the rules:
1. Unemployed for less than 6 months: If you have been unemployed for less than six months or have taken a leave of absence for less than six months, all you need is a 30 days paycheck stubs after returning to work with your new job or same job if you took time out. If you got a new job and it is in a totally different field, the mortgage lender will want to be convinced that your new employment will likely to continue and will require a verification of employment.
2. Unemployed for more than 6 months: If you have been unemployed for more than six months, most mortgage lenders want to see a six month worth of consistent work history with your new employer.
3. Taken time off for an extended period of time: If you have taken time off work for an extended period of time, more than 6 months, from the same employer, due to medical or other reasons, then mortgage lenders will require a letter of explanation and 30 days worth of paycheck stubs.
Switching Employment During Mortgage Approval Process
Changing employment during mortgage approval process happens from time to time. Switching employment during mortgage approval process will delay closing your mortgage loan. If you are intending on changing jobs and have notified your employer that you will be quitting and do not intend on leaving until after you close on your home, this will create a problem and your mortgage loan approval can be revoked. You need to realize that your mortgage lender will do a verification of employment and even though you are employed there and will be until your home has closed, one of the most important questions they will ask is the status of the likelihood that your employment will continue for the next three years. Prior to closing, many mortgage lenders will do a final verbal verification of employment and when the lender asks the HR spokesperson about your likelihood of employment, they will respond that you turned in your resignation and your last day will be a certain date. This will kill your mortgage approval. What happens on cases like these is that you need to wait until you start your new job and get your mortgage lender 30 days worth of paycheck stubs and a written verification of employment.
By Gustan Cho