You just got a new job. Congratulations! New beginnings are an exciting part of life. If you’re in the market to qualify for a new mortgage, your new beginning could have an impact on your mortgage application. Here’s what you need to know. (See also: 5 Money Moves That Will Ruin Your Mortgage Application)
Continuity of some kind is key
Lenders like to see financial and career stability. If you’ve recently changed jobs, that’s OK, provided that lenders see some kind of continuity.
For example, if your new job is in the same field that you’ve been in for the past two years, the lender would probably be comfortable with that. This is especially true if your new job is a promotion in title, responsibility, or salary. If you took a pay cut, but stayed in the same field, the lender would also likely find that acceptable, as long as your new income is at a level that is appropriate for the size of mortgage you want.
Stability and history in your field matters
Lenders start to get uncomfortable when you move into a brand-new field because they view that as a less stable work situation. That said, this is not an insurmountable problem. Be honest and upfront with your lender. Explain how your previous experience is applicable to your new field. This could take the form of your responsibilities, or similarity in the fields themselves.
It is also helpful if you can show that your education and any other training you’ve received aligns with your new role. You could secure a reference letter from your new employer, too.
Remember, getting a mortgage with a lender is a conversation. You aren’t putting in an application as a faceless entity. The lender wants to know who you are, what you do, and, most importantly, how you will repay the mortgage. You need to paint a picture of yourself as a responsible professional on a stable career path.
The paperwork you need
In addition to a letter or contract, the lender will also need other paperwork to verify your income. If you have all of this paperwork together before going to the lender, your sense of organization and preparedness will work in your favor. You will need:
- Your job offer letter with the details of your start date, title, and compensation. This letter should be on official company letterhead.
- At least two pay stubs, though I have recently heard of lenders asking for three or four pay stubs.
- The contact information for your human resources department. The lender will eventually need to talk to someone at your company to confirm the information you’ve provided is legitimate.
A new job and a new home are exciting prospects. Though continuity of employment eases the path to a new mortgage, many people buy a new home in conjunction with a new job. Be prepared with a solid, concise explanation of your decision to change jobs and have your paperwork in order. Also remember to shop around for a mortgage with a few different lenders to secure the best terms and rates. Happy house hunting!