Applying for a mortgage is stressful enough as it is — but what do you do if you lose your job during the process? Especially during the pandemic, this happens more often that it should.
Does this mean the window is closed on your mortgage? Don’t panic just yet. There may be some workarounds, and we’ll cover them with you in this blog.
Temporary or Permanent Job Loss
While some are being let go, many of us are experiencing furloughs. This leaves one in a bit of a limbo state, as you’re not sure if/when you will resume work. If you have a commitment from your employer as to when you will return to work, you may still be able to go through the loan application process. Just be transparent with your lender right away, and provide them with written proof from your employer with applicable dates. Note that you will most likely be able to qualify for the mortgage payments based on your reduced income.
If you do lose your job, you’ll most likely have to put the mortgage process on hold. It’s not ideal, but you’ll feel much better going through the process knowing you’ll have a stable income. In the same respect, lenders are looking for stable sources of income, as their risk of loss would be too great until you’re able to find a stable income. Losing your job is stressful enough as it is — so don’t go looking to add financial pressure to your situation!
If you’re applying for a mortgage with a partner, you could still finish out the mortgage process if your partner’s income is stable, and you’re able to pay the loan payments with their income alone. If you can make it work, go for it. But as we stated, in the midst of the pandemic, things are uncertain. There’s always the chance that your partner could lose their income too. Your best case scenario is probably to wait until you both have stable income.
Loss of Commission or Reduced Hours
Many of us work off a commission based structure. However, sales have decreased in certain industries due to Covid-19. Because of this, you may be able to get a lender to average out your income over a year, and look to see if conditions will improve in the future. You may have also experienced a reduction in hours, or a pay cut due to lack of business. Unless you can prove that this cycle is seasonal, your mortgage loan may be declined.
Whatever your financial situation may be, make sure you are in constant communication with your lender about it. Lenders will always verify employment at the beginning of the loan process, and revisit it right before closing. But if anything changes, it’s important to notify your lender right away. While continuing the loan process after you lose your job may be challenging, lenders are always here to help.
Speaking of mortgage lenders, we’d love to help! Whether you are a first time home buyer or purchasing a multi-million dollar home, you have found the right person. Ken Venick has over 30 years of experience in the mortgage loan business and can put you in the right mortgage loan product for your unique needs. Visit our services page for more info, and contact us online today.