With millions of Americans still unemployed or furloughed, lenders deal with job loss and income changes daily. If you’re in the middle of the mortgage process and you lose your job, lose hours, or get furloughed, you may think you’ve lost your approval.
Fortunately, this isn’t always the case. It depends on your situation, though. We’ve covered the most common situations below.
Furloughed with a Set Return Date
If you were furloughed, but have a set return date with written proof from your employer, you may continue the process. This varies by lender and the circumstance though. If you’re set to go back in a few months and can prove you can afford the payments on your reduced income, you may get through just fine as long as your employer provides official proof of your future return.
If you don’t have any income or don’t have a set return date, the lender may put your application on hold until you have a steady income again.
Permanent Job Loss
If your company eliminated your job, they downsized, or you’re otherwise out of a job, you may need to put your mortgage on hold. Lenders need proof of a steady income to fund your loan. They can’t lend you money with the uncertainty of a new job. Fortunately, you don’t have to be at your new job for very long before you can pick up where you left off, as long as you stay within the same industry and/or similar job type.
Joint Applicants and Job Loss
If you apply for the mortgage with a spouse or other joint applicant and only one of you loses your job, you may be able to continue with the loan process. It depends on the circumstances. Can your joint applicant manage the payment on his/her own? In other words, is his/her income high enough to cover the mortgage payment and other debts you’ve already committed to?
Lower Commissions
During the pandemic, many businesses have slowed down, which hurts the paycheck of those working on commission or on an hourly basis. This may not mean you can’t get a loan, but it may lower how much you can afford.
Fortunately, there are a few options. If a lender can consider your decreasing income seasonal, they may be able to annualize your income, determining your loan amount on the slightly lower income. If your income decreased too much, though, you may have to wait until your income stabilizes or you find a new job.
No matter the situation your employment is in during the mortgage process, always talk to us. We’ll be able to work out a solution one way or the other. Lenders always re-verify employment before the loan closing, so the earlier we know about the changes/issues, the quicker we can handle it and make the best of the situation. Job and income changes don’t automatically mean you’ll lose your mortgage, we’ll work together to get you through the situation.
