Can I get a mortgage
December 13, 2011 7:45 PM   Subscribe

Buying a house for the first time, have a question about obtaining a mortgage when I believe my current job will be ending soon. Also looking for general house-buying advice.

I'm thinking of buying a house in Central New York. I have no idea what kind of financial scrutiny lenders will demand when I apply for a mortgage. The contract on my current job (an academic position) ends in six months or so, and I am thinking of taking some time off.* My question is, is a prospective lender going to want some kind of assurance of ongoing employment past the end of my current job?

In case it's relevant, my credit rating is excellent. (At least it was when I bought a car six years ago. I haven't checked it since.)

Any general advice about house buying is welcome too, though I imagine there is already tonnes on the green.

*This is not financially insane, because I have enough money overseas that I could buy a house outright if I wanted to, though I would prefer to take out a mortgage for a number of reasons, mostly related to my fear about the direction the US economy is headed.
posted by anonymous to Work & Money (7 answers total) 1 user marked this as a favorite
When I applied for my mortgage I was planning to move (the mortgage was on a house some 400 miles from my job) and they definitely asked for a letter from my employer indicating that I would still be employed at my job once I moved. The story may be different if you've got the cash to buy the house outright, though. The rules on this seem to change every six months so regardless of what you hear here, you should probably talk to lenders.
posted by troublesome at 8:20 PM on December 13, 2011

All the lender is going to want to see is a current job and current income, and some money in the bank. It's impossible for a lender to truly ascertain future income because anyone can lose their job at any time. Of course, that's how we got in this mess in the first place. They can ask for assurance... but there's no reason you can't say "I am doing well at my job and I'm not planning on getting fired, who is?"

If you want that mortgage, don't intimate that your job is ending. They may not find out. You never know. But if you don't offer the info, and you already know you can afford the payments because you have the money outright, just don't go offering the lenders information that could cause them to deny your application.
posted by juniperesque at 8:31 PM on December 13, 2011

My question is, is a prospective lender going to want some kind of assurance of ongoing employment past the end of my current job?

I was in a similar position when I bought my home in '03. I knew I was leaving my teaching position, but nobody asked me about that. As I recall, my length of employment there was the only thing that came up. I don't know how things are right now, but I really think it'll be the same situation - if you've got a solid work history, I bet you'll be fine.
posted by blaneyphoto at 9:00 PM on December 13, 2011

The underwriter will verify employment via pay stubs when you submit your loan application (this verifies employment and income) and then verbally shortly before you close. It sounds like your credit is fine but you might want to check it now before you apply to see if it's accurate. Don't open or close any accounts and don't make any large purchases like buying a car. They'll want to verify your assets with bank statements - checking, savings, retirement, investment accounts.

It's a good idea to know how much you want to pay for a home and to estimate your payments to ensure that you're comfortable with that amount. Try different loan scenarios, different down payments, interest rates, loan type and terms, i.e. 30-year-fixed vs. 15 year vs. variable rate. You can do this on any bank site.

And like juniperesque said, don't disclose any info re your job ending.

Start looking online at homes in the area you're interested in so that you have a good idea of home prices, school districts if that matters to you and property taxes rates - depending on how familiar you are with the area.

Get a home inspection but remember every home has some issues and unless the house is brand new, that's to be expected. A home warranty can be a good idea just make sure you understand what is and isn't covered.
posted by shoesietart at 9:07 PM on December 13, 2011

I am in Australia, so no doubt things are somewhat different, but my husband and I bought a house a few months ago when his contract only had a few months left to run. We also had significant savings in the bank (and overseas), and our mortgage provider DID know about the job ending because over here they verify employment by seeing copies of your employment contract (which had an end date on it), not pay stubs. The bank didn't care about the job ending at all once they had seen documentation of our savings. They offered us a mortgage up to a ridiculous limit that we couldn't have paid on one income, (but that we could have paid for decades by gradually whittling down our savings).
posted by lollusc at 12:25 AM on December 14, 2011

I don't know about the specific job thing, but the best advice on home buying that I ever got (but then promptly neglected) is that your real estate agent may be very friendly, but he or she is not your friend.

You may have a "buyers" agent sworn to act in your best interest, but his or her fundamental interest is in seeing you make a deal. Any deal. Even if its a bad deal for you. How much you pay is basically irrelevant to the agent's compensation. And since a buyer is more likely to accept a higher offer than a lower one, "your" agent has the opposite incentive that you do: you want to get the house for the minimum price possible; the agent wants you to make an offer that is as enticing as possible to the buyer. I'm not saying agents are dishonest or bad people, but the US real estate structure create incentives that are opposite yours. And guarantees them around 6% of the transaction.

Your real estate agent may give you good advice, but functionallly, real estate agents are to houses as used car dealer are to cars. Anything they say should be subjected to the same level of scrutiny and suspicion. Same or more holds true for mortgage bankers.

(No, I was not abused by real estate agents as a child.)
posted by RandlePatrickMcMurphy at 7:23 AM on December 14, 2011

I agree with the "don't ask, don't tell" advice, but you should also be asking yourself- do I want to be starting a long-term financial commitment just as my primary income source is ending, without any plans for a new job? The only way I personally would do something so bold is if I had enough cash in savings that, even if I couldn't buy the house outright in cash, it was enough of a down payment to make my mortgage payments so low that the bank wouldn't bat an eye.

Anon: "In case it's relevant, my credit rating is excellent. (At least it was when I bought a car six years ago. I haven't checked it since.)"

Check it now. All the big firms (Experian, Equifax, etc.) are each required to offer 1 free annual credit report to you.
posted by mkultra at 7:41 AM on December 14, 2011

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