Changing jobs in the middle or mortgage approval ?

Question

My company is doing layoffs and mine is one of them. It is happening this week.

But I saw this coming from rumors and I was interviewing already.

I have a new offer letter already and will receive my first paycheck for the new job before our May 26th closing date.

My new salary is the same.

I know I need to disclose this to the mortgage loan officer. Is there a best way to handle this? Is this likely to be an issue?

1) We have excellent FICO scores and the bank has already done credit scoring. My middle score was 780 and my wife's middle score was 761.

2) We have more than the 20% down payment in cash in the bank and it is fully sourced and seasoned.

3) We have proven enough reserves in other investment accounts to satisfy the 6 months of reserve expenses.

4) The bank has already done income verification of my current employer last week and I came back with a "credit approved" from the mortgage lender.

5) We are only waiting on appraisal approval at this point and mortgage loan officer said we could close as soon as next Friday.

6) Our contract to close is scheduled for May 26th at the latest, but I think everything is ready to close this week.

How is the last minute job change likely to affect things and how should I best present this to the mortgage loan officer?

Jay Morrison · Answer

Goods news, I spoke with the mortgage loan officer. He said it won't be a problem. Just need my offer letter, one pay stub and employment verification with the new employer.

Harjeet Bhatti · Answer

You should inform your lender because they are going to do verbal verification before closing. If you have one pay check before  closing and job offer letter, it shouldn't be problem.

Albert Bui · Answer

Where I am at we'd only need 6 months (generally) if the borrower had an employment gap of 12 months or greater prior to getting the new role.

Jay mentioned he just transferred from his current job to the new job (back to back).

@Tony Nguyen

Andrew Postell · Answer

@Jay Morrison I tried to check on one item but I couldn't find a specific rule for it.  I may have been looking in the wrong spot but I'm pretty sure every loan type requires a Verification of Employment within 10 days of closing.  So while you have one completed already, it was probably for the underwriter to double-check earnings to qualify you for the loan.  The 2nd Verification is to check that you will still have a job.  I've worked at several banks and been a mortgage broker (where I represent 15 banks) and this 10 day verification has been at every lender I have used.

Albert Bui · Answer

HI Jay,

If you have not left your prior employer you should be fine since the verbal verification will come back good that you're still working there, but I suspect that if you have a first check from your new job that you've already left the prior employer? If so you will have to tell your lender.

The general rule with relocation's and job transfers/new jobs is that if you start your new job prior to the "first mortgage," payment you will be okay. This will need to be verified by your new employer via the employment offer letter/contract.

Usually a closing on may 26th has a first mortgage payment start date of July 1st so you'd be fine since you already started your new role. If you disclose and handle this upfront it could help avoid any delays in your closing as your lender will do a VVOE (verbal verification of employment) prior to issuing docs (at NAF we do this every time).

Hope that helps.

Andrew Postell · Answer

@Jay Morrison just to confirm, yes, this will be an issue.  It will also depend on what type of mortgage you are receiving FHA/Conventional/VA/etc.  So please do let your loan officer know ASAP.  Now, the bank might have an "overlay" attached to this type of a scenario.  An overlay is an EXTRA rule that a bank places on top of the lending guidelines from the loan type (FHA/Convetional/etc.).  It sounds strange but you might only need 30 days on the job depending on the loan type but the lender may have a 6 month overlay.  Meaning you would need to be on the job for 6 months to qualify with them even though the guideline says 30 days!  Do you know which type of loan you are getting by chance?

Jay Morrison · Answer

To everyone, thank you for all of the excellent advice. I really appreciate it.

Jay Morrison · Answer

Thanks for the response.

Changing jobs in the middle or mortgage approval ?

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