Changing Jobs Can Delay Your Mortgage Closing
An important aspect of every mortgage is the borrower’s employment information. Lenders place a lot of weight on employments and income since they want to make sure that the mortgage is going to be paid back. Due to the significance of employment, changing jobs can delay your mortgage closing.
During the process that leads to mortgage approval, the underwriter will look at the borrower’s employment, income and job stability. Most loans require that two years of employment history and income be documented. This will be done by examining the documents that the borrower submits, such as pay stubs and W2s, as well as, the verification of employment for each job held by the borrower.
Why your mortgage closing can delay:
When changing jobs during the mortgage process, the mortgage will be delayed until the underwriter receives satisfactory documentation from the new employer. This can be in the form of pay stubs which may take several weeks to accumulate and will put off the closing of the mortgage.
Changing a job will also bring up several questions that must be addressed. A verification from the new employer will be necessary. The new income of the borrower must now be considered. If the salary is higher, there should be no problem. However, if the salary is lower, the borrower may no longer qualify for the loan. A borrower who moves from a salaried position to a commission position will undoubtedly have some obstacles to deal with since commission salary is not always stable. The underwriter will also check to see if the new job is in the same field of work. A different line of work or a career change will send up a red flag when it comes to approval of the loan.
Employment, income and job stability is important to lenders who are looking for borrowers who have a reliable income to pay back the mortgage every month. Any job changes should be reported to the lender as soon as possible. If it is not absolutely necessary, borrowers should put off any job changes until after the entire mortgage process has been completed and the closing documents have been signed. Even the day of closing can be too soon to make a job change. After a mortgage closes, the lender’s quality control department may re-verify the information in the loan file. If the borrower changed their job on the day of closing, additional paperwork may be needed in order to make the loan file legitimate.
The best rule of thumb is to provide all employment information for the most recent two years to the lender and hold off on job changes until after the closing date come and gone and the deal is done. Remember that everything on the application and in the loan file can have an affect on the final mortgage rate that a lender offers.
By Rosemary Rugnetta