“What to Do If You Lose Your Job Before Closing on a Mortgage”

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What Happens if You Lose Your Job Before Closing on a Mortgage?

Experiencing a job loss is stressful, especially if you’re in the middle of the mortgage process. This situation can lead to significant complications. In the best-case scenario, your lender might delay the closing process or approve you for a lower amount. However, depending on the circumstances, your loan application could be denied.

Steps to Take if You Lose Your Job

If you lose your job during the mortgage process, it’s crucial to act quickly. Here are some steps to take:

• Contact your lender: Inform your lender immediately about your job loss. Transparency is key, as you sign a document at closing stating that your application information is accurate.
• Pause your application: Instead of canceling, ask your lender to pause your application. This can help you avoid losing application fees, earnest money, and other costs.
• Look for a new job: Start job hunting as soon as possible. If the new job is in the same industry and offers a similar salary, it may not be a significant issue for your lender.
• Explore other income sources: Consider side hustles, retirement savings, or other stable income sources. If you have a co-borrower with sufficient income, they might be able to proceed with the loan on their own.
• Consider reducing your loan amount: If you haven’t found a home yet, look for a less expensive property. You might also consider a larger down payment, but ensure you don’t compromise your immediate financial needs.
• Look into other housing options: If your lease is up or you’ve sold your current home, prioritize finding shelter. Consider short-term housing or long-term lease agreements if needed.

Can You Change Jobs While Buying a House?

Changing jobs during the mortgage process is possible and might be beneficial if the new position offers a higher salary or better benefits. However, it can impact your approval odds. Lenders value a steady employment history, so they may require detailed information about your past employment and income.

If you’re advancing in your career or moving to a similar job within the same industry with a comparable or higher salary, it may not be a significant issue. However, switching to a different career or experiencing a significant income drop could complicate your home-buying plans.

Make Sure You’re Credit-Ready for a Mortgage

Maintaining a steady income is crucial during the mortgage process, but good credit is equally important. While it’s possible to get approved for a home loan with a FICO® Score in the low 600s or even 500s with some loan programs, a score in the mid-700s or higher can help you secure the best mortgage interest rates and terms.

With Experian’s free credit monitoring service, you can access your FICO® Score and Experian credit report, along with alerts for any changes. Regularly review your credit file to identify areas for improvement and monitor your score to catch potential issues early.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. Our team is here to assist you every step of the way.

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