Getting a mortgage without a job?

February 7, 2011 6:50 AM

We have liquid assets that total over 85% of the cost of the house we want to buy, good credit (each of us has a credit score over 730) and a strong employment history. The house we want to buy is in Massachusetts and we are currently employed in California. We've been pre-approved by our bank (in MA) for a mortgage that is $50,000 more than we are interested in borrowing. We are concerned that the fact that we will have given notice on our jobs in CA during the time we will be closing on the house will result in the mortgage falling apart at closing. We've got a call into the loan office of our bank but we are looking for suggestions and experiences from people in similar circumstances.

We have enough to put 30% down and live comfortably for 3 years even without jobs. We also have one parent willing to co-sign if that matters. Any ideas that will help us become homeowners?

Thanks in advance for your wisdom!

posted by a22lamia to Work & Money (8 answers total)

You could always tell the bank you're buying it as an investment property.
posted by Ostara at 6:57 AM on February 7, 2011

I should have been more clear on that - you don't have to tell the bank that you're planning on moving and that you won't have jobs. We did something similar when we moved from Missouri to Nebraska because we had those same concerns as well. We didn't lie to them, we just didn't share that info and told them we were buying our new house as a 2nd home (we were! we hadn't sold our old one yet!) It all worked out.
posted by Ostara at 7:00 AM on February 7, 2011

Don't turn in notice until after the mortgage underwriter does the employment verification.
posted by COD at 7:30 AM on February 7, 2011

Response by poster: I should have added that the property is a 2 family. There are a number of reasons why we won't be able to delay giving notice. I'm probably too honest for my own good but federal law and my own conscience prevent me from lying on the line about continued employment in the mortgage application. I'm probably too honest for my own good.

I'm wondering if there is any type of mortgage or other options that we aren't aware off that may apply to our situation.
posted by a22lamia at 7:37 AM on February 7, 2011

My understanding is that credit market is very tight right now - there is indeed a good chance that this will mess up your closing. A few thoughts:
- My recollection is that the mortgage form asks for current employment, not how long you expect to stay around - yes you do not want to lie.
- can you informally tell your boss that you are leaving without having to formally give notice until later (the verification will come through HR, not your manager)
- can you arrange to take accrued vacation days first and then use the extra time to delay giving notice?
- are you planning to rent the other half of the property? is there an established history of rental payments that you could use to cover your mortgage payments?
-contact a mortgage broker in MA and see if they can find you something that would work with the addition of a co-signer. Brokers are often good at finding non-standard loans and they should know which banks are more flexible. (make your intentions clear so you don't get into trouble if you do end up using the bank you already found.
posted by metahawk at 7:51 AM on February 7, 2011

For our house purchase last month, the mortgage people required letters from both of our employers stating that we would be employed for at least three more years. They also called the employers for a second time on the day before closing to confirm that we were still employed. You should assume that they will know that you are leaving your jobs.

Now, our situation was a bit different from yours -- although we both had excellent credit, our liquid assets weren't nearly so high. So it may be that they won't actually care as much in your case.

Best of luck!
posted by wyzewoman at 8:47 AM on February 7, 2011

Try lowballing on the house with an incentive of an all-cash offer. Once you close on the house, refinance it (technically, financing for the first time) to take advantage of the rates and keep your capital liquid.
posted by heigh-hothederryo at 9:04 AM on February 7, 2011

Ah, welcome back to the 90's. Banks actually want to verify employment and income. There are two things a bank looks for -- ability to pay and willingness to pay -- and you need both. Even if you have tons of cash available, even enough to cover 85% of the purchase price, you can quickly become unwilling to pay if you lose your jobs and need your cash to live on. Banks are going to be unlikely to lend if you can't demonstrate steady income, so assets alone won't help.
posted by JackFlash at 11:44 AM on February 7, 2011