Is it Smart to Buy a Home When Changing Jobs?
Suppose you plan to change your job, or your company intends to transfer you to another area or you plan to delve into entrepreneurship. In that case, it is advisable to think about how these actionable can impact your home-buying plans. This is because any job change can have a significant influence on the ability to purchase a home.
Influence of a job switch on your loan approval
Know that switching jobs can adversely influence your loan approval. When you buy a home, lenders review your company's health, increases in pay, work history, qualifications, and other jobs that go with your salary. From your lender's perspective, they believe that your income and employment history are vital in repaying the loan.
Sometimes, new employment opportunities surface while you're trying to buy a home. In such a case, it is advisable to inform your lender as soon as possible. Even on approval of your loan, be cautious of changing jobs. Most lenders usually do a final check to confirm your income and employment have not changed since the first loan approval.
Changing jobs while intending to purchase a house doesn't always influence your chances of qualifying for a mortgage loan. However, some types of job change can be more impactful than others.
When will a job change have no impact on your chances?
Suppose you work hourly or are a salaried employee who doesn't earn additional income from bonuses and commissions over time. In that case, if you are trying to switch to a similar job with like pay, you may likely not encounter any challenges when buying your home
When will a job change leave an adverse effect?
Suppose you switch to a job paying a lower amount compared to the previous one, irrespective of the industry or line of work if may adversely impact your possibilities of keeping and acquiring a mortgage. The adverse influence on your income is deemed as a sign of instability.
At the same time, if you notably change your job title or switch to a completely different industry or line of work, you might experience some difficulties in obtaining a mortgage until you have two years of working experience in the relevant field. So, if you were a university lecturer and become a chemist, it might be pretty tricky to get lender approval.
So, overall, is buying a home when changing jobs a smart decision?
Purchasing a home while switching a job can be pretty tricky as lenders need both job and income stability before they can approve a mortgage. They also check your records with employers to confirm whether the employment will likely continue in the first three years of issuing a loan.
If your income and job title are stable even when switching jobs, you may be able to buy a home as you change companies. However, suppose your income drops drastically, or you move to an entirely different industry, or any alterations in your salary structure. In that case, you may need 24 months of stability before purchasing a home becomes achievable for you.