Loss Of Employment During Mortgage Process And How It Affects CTC
This Article On Loss Of Employment During Mortgage Process And How It Affects CTC Was PUBLISHED On July 11th, 2019
What If My Loan Application Is Denied Due To Loss Of Employment During Mortgage Process?
Income is one of the most important factors when qualifying for a mortgage.
- You can have the best credit in the world but with no income, there is no way you will qualify for government and/or conventional loans
- However, you can have poor credit, prior bankruptcies, prior foreclosures, collection accounts, charge off accounts, and other derogatory credit
- But if you have qualified income and can meet the minimum credit scores, you can qualify for a mortgage loan
- Most borrowers are employed and that is the source of their income
- Mortgage underwriters want to see proof borrowers are employed
- Also, underwriters want to see the borrowers’ employment is likely to continue for the next three years
- Income needs to be stable
- The borrower’s income is the closest to a guarantee and the insurance policy that lenders go by that the borrower can make their future mortgage payments and that the property will not foreclose
In this blog, we will cover and discuss Loss Of Employment During Mortgage Process And How It Affects CTC.
Can Mortgage Proceed With Loss Of Employment During Mortgage Process
There are times when the loss of employment during mortgage process happens.
- When loss of employment during mortgage process happens, this does not mean that the mortgage loan is dead
- However, there will be delays in closing on the borrower’s home loan
- There are lenders who will issue a mortgage loan denial if there is a loss of employment during mortgage process
- However, lenders like myself will suspend the loan process if the borrower has lost their job
- Underwriters will need to know whether or not the borrower has another job lined up
If you are a borrower who is currently in the mortgage process and get a great job offer, the best advice I can give you is not to quit your current job until you have closed on your home loan. Do not give notice that you are going to quit your job with your current employer.
Verification Of Employment During Loan Process
Most borrowers think that just because a lender has done verification of employment during the mortgage process that they are home free and that it will not affect their mortgage loan closing.
- This is not true and unfortunately, there are many times where I have borrowers who quit their jobs or change their jobs during the mortgage process
- Lenders will do multiple verifications of employment during the mortgage process
- Lenders will do a final verbal verification of employment prior to them issuing a clear to close
- The reason being is to make sure the borrower is still employed
- Lenders will ask the employer if the borrower’s likelihood of employment is likely to continue for the next three years
Again, loss of employment during mortgage process does not necessarily mean that the mortgage loan is denied but there will be delays in closing the mortgage loan.
Loss Of Employment During Mortgage Process And Changing Jobs During Mortgage Process
There are times where borrowers will get a phenomenal job offer during the mortgage process:
- They quit their current job and take on the new job
- When cases like this happen, the mortgage process is immediately put into suspense status until the mortgage underwriter does a full analysis of the borrower’s new job
- The mortgage underwriter will need to re-underwrite the mortgage loan application with the new job income and will want a written job offer letter from the new employer
Letters Of Explanation To Mortgage Underwriters
The mortgage underwriter will also want to see a written letter of explanation by the borrower as of why he left his previous job and took on a new job.
- The mortgage underwriter will want to see verification of employment by the borrower’s new employer
- One of the key things that the underwriter will look for is the likelihood and stability of the new job and whether the likelihood of his new employment will continue for the next three years
- Once everything checks out with the borrower’s new employment, the borrower will need to provide 30 days of paycheck stubs before they can close on their home loan
Changing jobs during the mortgage application and mortgage approval process is not recommended.
Loss Of Employment During Mortgage Process With Gaps In Employment
Borrowers can have gaps in employment and still qualify for a mortgage loan.
- If the borrower has been unemployed for less than six months, then the borrower can qualify for a mortgage loan with no seasoning requirements on his or her new job
- However, needs to provide 30 days paycheck stubs prior to closing on their home loan
- If the borrower has been unemployed for six or more months, then the borrower needs to be on his or her full-time job for at least six months before being able to qualify for a mortgage loan
If you had gaps in employment and had multiple jobs in the past two years and need to qualify for a mortgage loan, please contact me at 262-716-8151 or text us for faster response. Or email us at [email protected] I can help you answer any questions you may have and am available 7 days a week.