The Impact of Job Changes on Your Mortgage Application
Do Job Changes Affect Mortgage Applications?
When applying for a mortgage, one of the key factors that lenders consider is the borrower’s employment status and income. Therefore, any changes in the borrower’s job situation can have an impact on their mortgage application. In this article, we will explore how job changes can affect a mortgage application and what borrowers can do to mitigate any negative impact.
How Does a Job Change Affect Your Mortgage Application?
Impact on the Mortgage Process
When a borrower changes jobs during the mortgage process, it can lead to delays and additional paperwork. Lenders will need to re-underwrite the loan to take into account the borrower’s new employment information. The borrower will also have to provide additional documentation to verify their new position and salary, which can delay things even further.
Impact on Mortgage Approval
A job change can also affect a borrower’s chances of getting approved for a mortgage. Some borrowers may worry that a job change will negatively impact their application. However, in most cases, the additional income from the new job will be viewed positively by the lender.
That being said, if the borrower changes jobs after their loan is cleared to close, the mortgage lender may still want to verify income and employment. This would not be a good time to make a major career move. Also, the borrower’s ability to refinance their home loan in the next couple of years could be impacted by a job change after their original loan closes.
How to Mitigate the Negative Impact of a Job Change
If a borrower is planning to change jobs during the mortgage process, there are a few things they can do to minimize any negative impact:
1. Wait Until After Closing
If possible, it’s best to wait until after the mortgage loan has closed before changing jobs. This will minimize any potential delays or complications during the mortgage process.
2. Notify Your Lender
If a borrower must change jobs during the mortgage process, they should notify their lender as soon as possible. The lender can advise the borrower on what additional documentation they will need and what impact the job change may have on the mortgage application.
3. Maintain Consistent Income
If a borrower changes jobs, it’s important to maintain consistent income. If the new job pays less than the previous job, the lender may need to re-evaluate the borrower’s ability to repay the loan.
4. Be Prepared for Additional Paperwork
Changing jobs during the mortgage process will likely require additional paperwork. Borrowers should be prepared to provide documentation such as offer letters, pay stubs, and employment contracts.
All Rolled Up…
A job change can have an impact on a mortgage application, but it’s not necessarily a negative impact. In most cases, the additional income from a new job will be viewed positively by the lender. However, borrowers should be aware of the potential delays and additional paperwork that may be required if they change jobs during the mortgage process. By following the tips outlined in this article, borrowers can minimize the negative impact of a job change on their mortgage application.