Will taking a short sabbatical be a major problem when applying for a mortgage?
June 23, 2009 4:57 AM
Will taking a short sabbatical (2-3 months) be a major problem when applying for a mortgage?
I've been out of the US for the past couple of years, but plan to move my family back to Chicago sometime in 2010. I'll still be working with the same company and my wife will keep her job as well. When we return we are hoping to buy a place rather than rent. As this is a good time (since I'll be switching roles), I thought I'd try to take a couple of months off of work to recharge my batteries while also using that time to find a place to buy. We should otherwise look good from a mortgage application perspective (good credit rating, no debt). It's my first mortgage but my wife had one previously.
I need to make the sabbatical decision a few months before we'd start looking for a place, so any advice would be welcomed.
I've been out of the US for the past couple of years, but plan to move my family back to Chicago sometime in 2010. I'll still be working with the same company and my wife will keep her job as well. When we return we are hoping to buy a place rather than rent. As this is a good time (since I'll be switching roles), I thought I'd try to take a couple of months off of work to recharge my batteries while also using that time to find a place to buy. We should otherwise look good from a mortgage application perspective (good credit rating, no debt). It's my first mortgage but my wife had one previously.
I need to make the sabbatical decision a few months before we'd start looking for a place, so any advice would be welcomed.
Make sure you're actually employed and have a couple paystubs to hand your loan officer before you start actually applying for the mortgage. That will make everything much easier since you'll be a "normal case". If that's not possible, REALLY make sure you're employed at closing. Otherwise, they'll only be able to count your wife's income.
posted by crinklebat at 8:16 AM on June 23, 2009
posted by crinklebat at 8:16 AM on June 23, 2009
You'll probably need to write a letter of explanation for the gap if you don't have any paystubs or other tax info for your sabbatical period. They want a letter of explanation for anything unusual now.
posted by fiercekitten at 8:53 AM on June 23, 2009
posted by fiercekitten at 8:53 AM on June 23, 2009
When you apply for a mortgage, and again on the day of closing, they will verify your employment and income. You want to make sure that you have both on the day of closing. This means paycheck stubs, and they will probably call your employer for verification that you have a job that day.
Please don't omit information and hope for the best. If you do, and get caught, it's mortgage fraud. Most companies will absolutely refuse to say you have employment and certain pay if it is not true.
If you want to close on a house without having your income verified, you get a "stated income" mortgage. This has a much higher interest rate, because you are a bigger risk. In fact, I would think it would be hard to get one of these right now.
I know about this from when I closed on my house: As they were building it, my employer went bankrupt. I had to find a job before the builders finished building, so I looked into every possibility. I found a job the same week the builders finished, and indeed the mortgage company did call for verification, and wanted my offer letter in lieu of paycheck stubs.
posted by Houstonian at 11:06 AM on June 23, 2009
Please don't omit information and hope for the best. If you do, and get caught, it's mortgage fraud. Most companies will absolutely refuse to say you have employment and certain pay if it is not true.
If you want to close on a house without having your income verified, you get a "stated income" mortgage. This has a much higher interest rate, because you are a bigger risk. In fact, I would think it would be hard to get one of these right now.
I know about this from when I closed on my house: As they were building it, my employer went bankrupt. I had to find a job before the builders finished building, so I looked into every possibility. I found a job the same week the builders finished, and indeed the mortgage company did call for verification, and wanted my offer letter in lieu of paycheck stubs.
posted by Houstonian at 11:06 AM on June 23, 2009
Thanks for the help all.
From the responses posted, my sense is that I should make sure that my company would consider me "employed" even though I wouldn't be getting paid at that moment, and that I should gather up as much supporting documentation as possible (previous pay stubs from the UK, a salary verification letter from my company, etc.).
I'm happy to have them verify my income and employment - I don't think those things will be a problem. The concern I have is that they think something along the lines of, "looks good, but he's not getting paid right now so REJECT."
posted by mzanatta at 1:19 AM on June 24, 2009
From the responses posted, my sense is that I should make sure that my company would consider me "employed" even though I wouldn't be getting paid at that moment, and that I should gather up as much supporting documentation as possible (previous pay stubs from the UK, a salary verification letter from my company, etc.).
I'm happy to have them verify my income and employment - I don't think those things will be a problem. The concern I have is that they think something along the lines of, "looks good, but he's not getting paid right now so REJECT."
posted by mzanatta at 1:19 AM on June 24, 2009
BTW, I should clarify: I'm currently employed by the company but have been assigned to a foreign office. I'll be returning to the US and will continue to work for the same company, but will be switching roles (slightly).
posted by mzanatta at 1:24 AM on June 24, 2009
posted by mzanatta at 1:24 AM on June 24, 2009
This thread is closed to new comments.
posted by longsleeves at 7:48 AM on June 23, 2009