Losing Job During Mortgage Process And How To Close On Home Loan

This BLOG On Losing Job During Mortgage Process And How To Close On Home Loan Was UPDATED On May 13th, 2020

Still Qualifying For Home Loan After Losing Job During Mortgage Process

Losing job during mortgage process does not happen often:

• However, there are times when it is inevitable and does happen to the best of us
• Loss of employment during mortgage process does not automatically mean the home loan cannot close and the file is dead
• There can definitely be delays in closing home loan when losing job during mortgage process
• Losing job during mortgage process does happen
• Lenders view employment and income as one of the most important factors
• The longer a borrower has been employed with a specific employer proves job stability
• Job stability translates into income stability
• It is a consistent income predictor for the future
• Losing job during mortgage process can happen
• When this happens the whole mortgage process comes to an abrupt halt until the employment and income issue has been resolved

In this article, we will discuss and cover Job Loss Mortgage Process And How To Close On Home Loan.

Losing Job During Mortgage Process And Changing Jobs

Borrowers should try not to change jobs during the mortgage application and approval process.

• However, losing job during mortgage process does happen and cannot be avoided
• There are cases where borrowers may get a job offer they cannot refuse at a much higher salary and benefits
• If this happens and the borrower does take on a new job during the mortgage process, then the lender will need to get a written verification of employment from the new employer

Lender also need to provide 30 days paycheck stubs before borrower is able to close on their mortgage loan.

Mortgage Guidelines On Changing Jobs In The Past Two Years

Changing jobs from one W-2 wage earner status to another W-2 wage earner status position is fine.

• However, borrowers need to realize if they go from a W-2 wage earner job to a 1099 paying job, then they will no longer qualify for a mortgage loan

If you are 1099 wage earner, you need two years of continuous employment history as a 1099 wage earner in order to qualify for a mortgage loan.

Losing Job During Mortgage Process And Retirement

Many folks who are about to retire want to do the following:

• get a home mortgage either to purchase a new home
• purchase a second home
• upgrade
• Or downsize

They like to get their mortgage loan prior to them retiring due to employment verification.

• This strategy can be tricky
• This because when lenders do a verification of employment on a borrower, one of the questions asked is whether or not the borrower’s employment is likely to continue for the next three years
• If you told your employer that your last day will be a specific date, then the Human Resources manager will notice that on your employment records
• Will most likely tell lender that the employment likelihood of being employed three or more years is not likely

This because the borrower has turned in their resignation.

Permanent Loss Of Job

If the borrower has gotten fired during the mortgage loan application and approval process and has no other job to go to, then there can be issues in proceeding with the mortgage process.

• When a borrower loses their job during the mortgage process, the borrower’s income is no longer valid
• The only option that the mortgage process can proceed is by adding a non-occupant co-borrower 
• If the co-borrower has sufficient income and can meet the minimum credit standards to qualify for a home loan, problem solved
• The borrower also needs to consider whether or not they can afford their home mortgage payments with the loss of job and how likely they will be to gain full time employment

Getting new full time employment is certain fields are much more easier and quicker than other fields.