You may receive a number of tips during a mortgage and homebuying situation, and one you may hear is to avoid any situation where you'll be changing jobs during this process. It's true that there are some situations where a job change during a mortgage application or homebuying setting, but it's important to understand the important details here before moving forward if this is a possibility for you.
At Integrity First Lending, we're happy to assist you with numerous parts of the mortgage and homebuying process, from obtaining mortgage pre-approval and understanding your mortgage rates to moving forward with any of several of the mortgage programs we offer. What are some situations where switching jobs during this process may have an impact on your situation, and when do you have little to nothing to worry about? Here are some examples of both.
When a Job Change Might Impact Homebuying
Here are a few of the scenarios where a job change may impact any part of your home purchase, from obtaining a mortgage to other needs:
- Switching from salary to bonuses and commissions: If you're being switched from a salaried position with a regular paycheck to a position where bonuses and commissions are a more regular part of your income, this can be cause for concern. You'll need to ensure that the reason you're switching from salary to this type of income is not because they were trying to hide something regarding your income or their intentions for lending you money. You will have to confirm that the new income is stable and likely to be consistent.
- Becoming self-employed: While some programs can accept a year of self-employment, most lenders want a two-year history to confirm consistency.
- Frequent job changes: While singular job changes aren't usually much cause for concern, job hoppers may be viewed more cautiously. This is because lenders want to be sure that you're likely to have a long-term, stable employment history in order to ensure that you'll be able to repay your loan.
- Major salary drop: Finally, if your job change involves a significant drop in pay, this can often pose problems. Your income is one of the most important factors for your loan approval process after all, so if you take a lower-paying job or suffer a drop in salary, it can be difficult to obtain approval.
When a Job Change Likely Won't Impact Homebuying
In most situations, however, changing jobs won't impact your homebuying situation. Here are a few examples:
- Switching to a similar structure: As long as your new job isn't intended to hide your income or acting in any way that is untrustworthy, switching to a similar structure shouldn't impact you. This is because it's assumed that if you're working in the same field, your job responsibilities are likely very similar.
- Higher pay or benefits: Of course, if your new position has a higher salary or provides better benefits, this will have little to no impact on your homebuying process.
- Minor switch in employment: Finally, the majority of job changes don't pose much cause for concern. Switching from one company within your industry to another, moving between management and hourly pay, or making a similar minor switch, this is all unlikely to have an impact on your homebuying process.
For more on how a job change may impact your mortgage or homebuying situation, or to learn about any of our great mortgage rates or services to clients, speak to the pros at Integrity First Lending today.
