Change of jobs is a part of a long and eventful career. However, it is important to note the implications on your mortgage. Job changes tend to make lenders a little uneasy for various reasons. Mortgage providers want to see an applicant in the same field for a period of at least two years. This is taken as a measure of financial stability. Thus, if you’re switching jobs in the same field, then it shouldn’t be a problem. Let’s take a closer look at similar scenarios.
- If you’ve just switched jobs in the same field but are earning less than before, this would be admissible as long as your income allows you to get the mortgage you’re looking for.
- If your new job is temporary, the lender would take the average of your income assuming that you were earning a regular wage but have now switched to a impermanent income.
- If you’ve changed jobs and its not in the same field as before, this would raise certain red flags.
Switching to a different field
Switching to a different career path altogether will make the lenders reluctant in giving you a mortgage. This doesn’t mean that you can’t do anything about it. If you sit down and have a conversation and iron out some of the finer details, you may be able to put the lender’s mind at ease. If you can show that your education is relevant to your new job and that you have previous experience in similar dealings, the lender might be amenable. Getting a reference letter from your present employer couldn’t hurt either. Try to sit down and have a conversation with the person across the table. He simply wants to know what you do, if you’ll be able to pay back the mortgage and if your income is stable.
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Credit score and income
Lenders want to know what your credit score is. FICO scores over 730 are great and you’re viewed as a reliable borrower. You’ll also have to show what your monthly income is and your debt-to-income ratio so that your other debts don’t eat away a big part of your salary. Borrowers who work on commissions or bonuses need to specify what part of their income is fixed. A steady income is more desirable and if you can prove that bonuses or commissions are stable and regular by producing pay stubs of the previous year, there’s nothing like it. Additionally, proven ability to handle debt in the past and a blemish-free record sans bankruptcies and foreclosures, gives you a leg up.
Paperwork
Some of the paperwork that you’ll need, other than your salary and title are:
- Offer letter with your salary mentioned in it.
- Contact information of your HR department in order to get a better idea about you from the company itself.
- Two or three pay stubs.
- Date of joining.
Therefore, if you can furnish all these details aside from your educational qualifications, you should be able to get pre-approved. The key is to give all these documents in a timely fashion.
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