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How it can affect you
The effects of changing employers can be disastrous to your
loan application.
Did you know... Lenders like to see a
minimum 2 year history of employment, an established bank account, and of
course - a good credit history.
Self-Employed
Self-employed individuals typically include a
good deal of expenses on the Schedule C of their tax returns, although this
minimizes their tax obligations to the IRS, it also minimizes their overall
gross income figures.
If you are already self employed and considering changing your business
status
from a sole proprietorship to a partnership or corporation, you should also
hold off until after the purchase your new home.
Salaried Employees
People who earn a salary (fixed
compensation for services)
Will you be earning a higher salary by
changing? (potentially better qualifying you for a new home mortgage loan.)
If you are uncertain, then perhaps you should wait.
Switching employers may not create a problem.
Hourly Employees
People whose income is based on
hourly wages who work a 40 hour week (with no over-time earnings)
Lenders like to see a consistent flow of income
and preferably a solid work history.
Changing employers poses little to no affect.
Part-Time Employees
"Part-Timers" (those earning an hourly income
but rarely working 40 hours per week)
A lender can better calculate your income by
averaging your history of earnings in your current job.
Seriously reconsider before you change employers.
Commissioned
Employees
Changing employers can create an uncertainty
about future commission earnings. It will show no solid history of earnings
from your new new employer which a lender can produce an average.
Lenders like to see a 2 year history of
commission earnings in calculating an average income for those commission
based employees. Changing jobs potentially could
negatively impact your ability to purchase a home.
Rethink changing employers before purchasing
a home.
Over-Time Earnings
Employers generally pay overtime earnings
differently, the employees overtime income cannot be determined if they
change employers.
The lender will determine your overtime
earnings by calculating a monthly average over the last two years.
Stay on the present job - the lender will
typically give a credit for overtime income.
Bonus Income
Lenders will rarely consider future bonuses
as income unless you have been on the same job for two years and have a
history of receiving those bonuses.
They then will average your income from
bonuses over the previous two years while calculating your income.
Bonus income cannot be averaged nor
calculated as no history will exist with a new employer.
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