Effect of job change on mortgage process?
December 13, 2010 7:23 PM   Subscribe

Switching jobs after being pre-qualified for a mortgage, but before completing the mortage process -- What effect can this have on the process?

A friend and her husband have been building a new house. They were pre-qualified for a mortgage (whatever that means now) when they started construction this last spring. Now the husband has received a job offer and they just applied for a construction/permanent mortgage.

If he accepts this position will it affect them completing the mortgage process? Could they fail to qualify altogether? Or could they wind up being able to get less than the amount they expected? Or maybe would it affect their interest rate? Other possibilities?

They're in a pinch because he wants to accept the job (the new position, I believe, has a comparable salary to the one he had when they pre-qualified) but they are afraid of the impact on their mortgage if he does.

Thanks for any help/info!
posted by leticia to Work & Money (7 answers total) 1 user marked this as a favorite
I switched jobs during my mortgage application period (to a comparable job in the same industry), and notified my lender. It did not have any effect on the application.
posted by mbrubeck at 7:28 PM on December 13, 2010

Provided that the new job has a comparable salary and is in a similar industry (ie the job is the same or the next logical step up, not a complete departure to a totally different job) this should not impact their ability to get the mortgage or the terms offered for the mortgage . Do tell them to notify the lender of the change however as the lender will call to verify his employment again and will not be amused to find out he is no longer employed where they think he is.
posted by supercapitalist at 8:05 PM on December 13, 2010

Notify your lender. There is usually a final credit check done the day of the mortgage, and unexplained last minute changes might not tank your mortgage but they can often delay the actual signing schedule. As with mbrubecks coment; staying with the same profession is generally ok; but a shift to another field could reset the desired 12-24 months of stable employment lenders look for.

Enough of a delay in signing, and your broker loses a percentage of their commision based on the 'lock' that they put in. Too much of a loss; and the broker will pass on the signing; or have to add a 1/4 percent or so to the APR in order to make money . A good broker has ensured everything is ready before the actual approval process begins, and should be fully briefing their client about all of this.

Blah, blah, blah. No changes are best changes once approved.
posted by buzzman at 8:06 PM on December 13, 2010

If pre-qualification means the same thing now as it did a year and a half ago, it means nothing at all. I think we were told we were "pre-qualified" when the bank looked up our credit scores and saw they were within a reasonable range.

They should just talk to their lender - go straight to the horse's mouth. Ultimately, it's in the lender's best interest to make sure borrowers are in stable positions that they're unlikely to leave, and making good money - it makes it easier for them to resell the mortgage, or makes it more realistic that they'll keep getting paid if they hold onto it.
posted by little light-giver at 8:45 PM on December 13, 2010

I was "pre-qualified" after a 5-minute phone conversation... it may mean different things in different situations, but in my situation it meant nothing at all. That said, people buy houses soon after starting a new job all the time. They need to talk to their broker/lender to get reliable advice.
posted by deadweightloss at 8:54 PM on December 13, 2010

Talk to lender ASAP. This spring when I got my mortgage it ALMOST fell through because the lender freaked out two days before closing when they found out about my pay schedule (academic, 10-month: I have never in my life gotten a paycheck in July or August). I live in a college town, and the local bank knew from the outset that I was on the same 10-month pay schedule as every other faculty member. So if it had only been the local bank involved, there would have been no problem. But the mortgage was actually being offered by one of the big national firms, and their approval algorithm, somewhere a thousand miles away, could not deal with "anticipated July and August income $0" (OMG OMG UNEMPLOYED FAIL). I had to supply them with affidavits from three different offices at school telling them I am, in fact, tenured, and unemployment is a smaller possibility for me than for most other people... It was all unbelievably stupid, but it worked out in the end.

So what I'm saying is, make sure your lender has all the details well in advance, and be prepared for some last minute document-gathering if someone in NYC or wherever gets anxious about the job change.

And keep in mind that the nice, sane person you are dealing with for your mortgage might have little actual control over whether it is approved -- it's the actual lender and his algorithm that you have to satisfy.
posted by philokalia at 6:15 AM on December 14, 2010

I survived an almost similar situation through extensive documentation (mostly letters from the new employer about the terms of my job offer and salary potential) and clear communication with all parties (lender, real estate agents, etc.).

The agents and lenders will try to tell you not to do this, there may be consequences, blah, blah blah, but do what you need to do and verify everything, and they will see that you aren't a risk (it's really all about your ability to repay the loan) and the lender will move everything forward.

Good luck!!
posted by kuppajava at 8:36 AM on December 14, 2010

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