How Will Changing Jobs Effect Your Real Estate Transaction?

  One of the most frequently asked questions is, "will changing jobs affect my home purchase?" For most people the answer is no. But for those of you that are self employed, commission sales based, or receive a larger part of your salary in bonuses you should consider buying before you switch.
  Salaried employee and hourly employees that are relocating for a better job with a fixed salary at or higher than your previous salary should have no problems securing a loan.
  Basically, when you apply for a mortgage the lender is looking at how to calculate your income. Salaried and hourly workers are the easiest to understand where as a self employed or commission based person does not have a consistent income base to calculate. Lenders normally look for two years of documented income in order to determine loan amounts.
  If you are looking to make a jump into the self employed world or starting a corporation before you buy, WAIT. Buy your home first and then start your business. Otherwise a lender more than likely won't be underwriting your mortgage.

A simple rule of thumb is that it is acceptable to change jobs as long as you are:

  1) Currently paid via W-2 and are switching to another W-2 position

  2) Currently paid via 1099 and are switching to a W-2 position

Here are some situations you definitely need to avoid:

A) Switching from a salaried or hourly position to a postion that is salaried or hourly but pays less than your current job (even if your new job would technically pay more because of things like bonuses or overtime). If this is your situation then you should purchase your home BEFORE changing jobs (or at least consult one of our Loan Officers first).

B) Switching from a W-2 job to a position that will be paid via 1099. If you are in this situation be aware that getting a loan on a home may be next to impossible. In the eyes of a lender this is the equivalent of lacking a 2 Year Employment History.

  Hopefully this information helps you make a more powerful decision and helps you stay in control of your future. If you have any more questions related to this (or anything else for that matter) please give me a call...