The Way Employment Status Affects a Home Loan
If you’re thinking about switching careers or
changing employers before you apply for a home loan
or refinancing, perhaps you should consider how it can
affect your financing opportunities? While the affects
of making a career move may not impinge on your ability
to qualify for a new mortgage loan, for some homebuyers,
a new job may wreak havoc with the passage of their
Salaried Employees For the salaried employee, home
loan financing may not be affected by their career change.
Generally, a salaried professional does not earn additional
income from bonuses, overtime, commissions. Consequently,
making an employment change should not pose a great
obstacle. At the same token, a career change can represent
a higher salary, meaning an improved qualification for
a mortgage loan.
Hourly Employees For employees compensated based on
hourly wages and who maintain a normal forty-hour workweek
without over-time, making a career change or employer
switch should not impose any financing difficulties.
Self-Employment As self-employment features a variety
of benefits, obtaining financing can be a little tricky.
For the gainfully employed, home loan seeker considering
sole proprietorship, the career change is not recommended.
Obtain mortgage financing before making he switch. On
the other side of the spectrum, for the business the
plans to upgrade their sole proprietorship status to
a partnership or corporation, the process should be
postponed until the new home financing has been finalized.
In generally, lenders prefer to review a two-year
track record of self-employment income prior to making
a loan approval. Moreover, self-employed mortgage consumers
have a propensity of including an exorbitant amount
of expenses on their tax returns (Schedule C). As a
Schedule C can reduce the amount of tax obligations
to the IRS, it can also decrease the necessary income
needed to qualify for a home loan.