Job Loss During Mortgage Process And How To Proceed To Close
This BLOG On Job Loss During Mortgage Process And How To Proceed To Close Was UPDATED On May 6th, 2019
Income is probably the most important factor in qualifying for home loans.
- Home Buyers can have prior bad credit, prior bankruptcy, prior foreclosure, and low credit scores and as long as they have documented income, they can qualify for home loans
- Having perfect credit, high credit scores, and good assets are great but without documented income, applicants will not qualify for a mortgage
- The lender will only approve, process, and close on the mortgage only if borrowers have a full-time job or stable income
- Job and/or income needs the probability and likelihood to continue for the next three years
- Ability To Repay Mortgage rules and regulations were implemented and launched by the CFPB home buyers are able to pay for a mortgage payment
- This requirement is not just a lender’s guidelines but also federal lending guidelines
- Borrowers will not qualify with Job Loss During Mortgage Process
Income Qualification In Mortgage Process
Before a mortgage underwriter issues a pre-approval, the loan originator will require to provide two years tax returns, two years W-2s, and 30 days of paycheck stubs to make sure borrowers qualify.
- Lenders will also do a verification of employment
- They will send a questionnaire to the employer to complete the following:
- how long worked there
- income
- how much overtime income past two year
- bonus income made the past two years
- Besides verifying income and employment status, the lender needs to feel comfortable with the likelihood of continued employment for the next three years
- Continued income for the next three years makes lenders feel comfortable with borrowers making mortgage payments
There are two phases of verification of employment for most mortgage lenders:
- The initial and most important verification of employment is done during the mortgage process
- It is a written verification of employment
- Most, not all, lenders will also do a verbal verification of employment prior to issuing a clear to close
- A clear to close is when a lender is clear to fund the mortgage loan
