As discussed in previous articles, income history plays a critical role in a consumers ability to qualify for financing, simply put, income shows a person’s ability to repay the loan they are requesting.
In today’s day and age changes with employ are far more common than in prior generations, in fact both employees and employers are far more likely to “seek greener grass” than ever before. It is important, when looking to purchase a home you understand a few notes on job changes to ensure you are not putting your dream of homeownership on the shelf;
1) Income Type: The manner in which we calculate a borrower’s income is affected by how he/she is compensated.
For example, if self-employed, commission based or using bonus/overtime income, a 2 year history of receipt is required. So if you are going from a 100% commission income to another 100% commission income with a different employer, or you are using your OT to qualify, you may be out of the game for a 2 year period.
If hourly/salary to hourly/salary it typically does not pose any problems.
2) Field: Experience is Key!
If a borrower remains in the same field as his previous employ than it would not be an issue, proof of receipt of this new income would be required of course, at the most being 1 full month worth of pay stubs for a final approval.
If a consumer changes from being a chef to a ninja, this would clearly be of concern (for more reasons than one) and his/her new income could not be used until he has a minimum of 6 months experience in the new field and in some cases, as much as 12 months would be required.
3) Transition Period: Gaps in employment can be an issue if deemed excessive, typically, if a borrower secures employment within a month of leaving his previous employ it is a non-issue. If it takes him 3 months to find a new job it shows instability.
Every situation is unique and communication will always be the key to your success, if you are preparing to purchase a home always remember to notify your mortgage professional before making any changes to your Income, Asset’s or Credit.
And PLEASE always remember…
When purchasing real estate choosing the right professionals to assist you in YOUR journey will be the key to YOUR success, I have been blessed in my career to surround myself with whom I consider the very best at their profession and welcome you to contact me and my team to help Guide You Home.
Content submitted by;
Sr. Mortgage Advisor, NMLS #397424
Province Mortgage Associates, Inc., NMLS #2861