How Can You Get a Mortgage and Change Jobs at the Same Time?
If you are looking to move out of state, getting a mortgage may seem like a daunting task. However, many considerations of mortgage relocation loans are similar to those of any other type of mortgage. Fortunately, getting a mortgage when switching jobs or moving to a different state can be relatively straightforward if you understand the process and engage in careful planning.
Employment Considerations When It Comes to Relocation Mortgages
Your ability to repay the loan is the primary concern of the lender when you apply for a mortgage, which usually translates to a favorable employment situation.
Getting preapproved for a mortgage before you relocate is a common recommendation, but if you want final approval for your mortgage in a completely different area from that you applied for pre approval, lenders typically look deeper. Mortgage lenders, in either case, will undertake employment verification as part of your assessment before getting a loan.
The lender will get in touch with your prospective or current employer and ask questions about your job and its longevity, your pay status and structure (bonus-based or commission-based pay, hourly or salaried, contractor vs, W-2 employee) along with other questions aimed at determining whether you’re a low-risk prospect for a loan.
If you have been in your current job for less than 2 years, lenders will also want to see your employment history. Employers generally want to see a history of reliable, steady, and long-term employment.
Getting a Mortgage When Moving Out of State
If your employer has implemented remote work or work-from-home policies, you can usually take advantage of them and keep your job after relocating. A more common scenario, however, is to relocate and switch jobs at the very same time. If that’s the case, mortgage lenders typically use several criteria in determining whether you are a high-risk or safe prospect.
Companies sometimes provide relocation packages with different components, such as a mortgage relocation program or guaranteed buyouts. Other companies will partner with lenders to offer valued employees relocation mortgage loans to make it easier for them to move for the job.
Still, it is possible that you don’t enjoy access to such perks. Today, lenders are often willing to consider “offer letter mortgages,” where they accept your signed offer letter in the new location as proof of income. Even then, mortgage lenders still consider the specifics.
If you are moving to a better job – better pay, higher position, or other career advancements – within the same industry, lenders are likely to consider this positively. If you are making a lateral move but you have a long history of steady employment, lenders are still likely to approve, but will probably be more cautious.
Changing jobs may affect your loan approval, but like most matters relating to mortgage, the devil is in the details. So long as you move from one position to another with either equal or higher pay, and you can provide documentation of your work and income history, any changes to your loan approval chances are likely to be minimal.
For lenders and their underwriters, the most important thing is to make sure that you are able to repay the loan, and the best indicators of that are your employment history and income. Lenders want to be sure that you have ongoing reliable, steady income for at least the next 3 years. If you are thinking about accepting a new job or recently moved positions, consider how it can hinder your mortgage acquisition.
5 Easy Steps to a Relocation Mortgage
Are you relocating and going to be getting a new mortgage? This guide can help you make the process as easy as possible by providing step by step instructions and tips.
What Can You Expect If You Are Changing Jobs Prior to Getting a Mortgage?
If your new job is in the same industry as your previous one, and if the new job pays better, then lenders are likely not to have a concern. Promotions are typically viewed favorably. Even lateral moves to a stronger organization that offer increased salary or improved benefits are sensible business decisions that are unlikely to impede loan acquisition.
The lender is likely to want to ensure the longevity of the new job and confirm your new salary. Full-time positions that come with long-term contracts are ideal. You can expect to work in your new job for at least 30 days before you can earn loan approval.
Typically, you will have to provide your first pay stub from the new company and disclose your offer letter that confirms your salary. You should be ready for lenders to deduct commission earned from the total salary because your commission is still unproven in your new position and this may affect the total loan amount that you are eligible for.
How Can You Get a Mortgage If You Have a New Job?
You should generally not transition to a position that does not make financial sense, such as a major industry change, a change from full-time employee to contractor, or a lateral move for less pay. Employment history that shows frequent career moves could be a red flag that you may be unable to maintain steady income.
Extended gaps in employment history are yet another red flag. Your chances of acquiring a mortgage could be higher if your unemployment period was less than 6 months. Some exemptions, however, include military service members returning from deployment or full-time students transitioning into the workforce; these paths are considered forms of employment.
How to Get a Home Loan When Relocating
If your new job requires you to move, you will have to solidify living arrangements before you relocate. If you already have an offer letter and start date, you can proceed with the purchase of your home.
If not, you’ll need to rent in the new location for at least 30 days and provide lenders with your first pay stub since it is the least stressful situation. Extended-stay hotels are popular options while you familiarize yourself with the local real estate market and surrounding community.
Alternatively, you may try buying and closing on a property in the new location before you give notice to your current job to ensure a smooth, one-time move. If you are moving quickly, understand that a purchase takes anywhere from 30 to 45 days on average, to close. Lenders will verify employment when you apply for the loan and then again just before closing, so ensure that you maintain employment until the sale closes.
If you are already a homeowner and need to sell your current home while shopping for a new one, and perhaps live in a rental property simultaneously, finances may become demanding. Selling your current property before you buy a new one can provide cash from closing to fund the down payment, and this may boost your loan eligibility.
If you are able to afford to carry 2 mortgages for a period of time, however, you can purchase a home in the new location, move in immediately, and then work to sell your old property remotely. Here, you will be limited to the speed of the purchase agreement or you can expect to disclose your new role to the lender.
Applying for a loan before you choose a home might seem counter intuitive. After all, shouldn’t you already have a property in mind before you ever get in touch with the mortgage broker? The answer is actually no, especially if you are moving out of state and particularly if you are a first-time homebuyer.
If you are moving across state lines, the process may be more difficult, which is why you need to get started early on and get pre-approval for that mortgage. Fortunately, most mortgage providers will allow you to fill out a mortgage application online to get the ball rolling.
It is important to hunt for neighborhoods before you start hunting for houses. After all, it doesn’t really matter how quaint the property is if it is located in the most crime-ridden or remotest part of the city.
Start by searching Google Maps or other online references to get an overall sense of the neighborhood. Specifically, you will want to search for the nearest:
If you have children, look for good schools and safe neighborhoods. Fortunately, the Internet is full of resources that reveal school rankings and crime statistics. You can even scour through the online review websites to find the best nighttime hot spots, hairdressers, movie theaters, and restaurants.
Finally, look for articles related to the area; magazines love running stories on the best and worst places to live, along with insider tips for making the most of any given city or town. If you research the locale thoroughly, you will know exactly what you are getting yourself into, even before making your initial exploratory visit.
Once you identify a good neighborhood, you can start your house search. You will get a sense of the house prices in a certain area by even glancing through the listings. Obviously, you will want to actually visit potential homes in person before you commit to a purchase. Online resources might be great, but the reality on the ground usually looks slightly different.
If you are planning on lugging your furniture across state lines, ensure that you measure each piece to determine whether the home you are considering is the right fit. You should also visit some of the local schools. You can make a truly informed decision only after seeing the neighborhood with your own eyes.
Can Relocation Packages Help with Home Purchases?
Companies usually offer relocation packages that may range in coverage from paying for a moving service to a generous Guaranteed Buy Out (GBO). A GBO is when the company purchases your home for the average appraisal value if it fails to sell in a fair timeline.
Other relocation packages may help with paying the real estate commission fees or closing costs of your home sale. If you are underwater on your home, the new employer may cover the loan difference at resale.
Some relocation packages assist their new employees to purchase a local home within just 1 year of moving and can either contribute to a down payment or buy down your interest rate.
Whether purchasing a house out of preference or necessity, acquiring a new job in the same industry for higher pay probably won’t hinder loan approval, but it could slow down the process by up to 1 month.
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