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What to Do 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. At O1ne Mortgage, we understand the complications this can create. If you find yourself in this situation, here are some steps you can take to navigate through it.

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

A mortgage is a significant financial commitment, and your ability to make monthly payments is crucial for loan approval. If you lose your job before closing, several outcomes are possible:

• Delay in processing your loan: If you have another stable income source or a co-borrower with sufficient income, the lender may continue with the loan process, though there may be a delay.
• Approval for a smaller amount: If you still have sufficient income, you might get approved for a smaller loan. However, this could affect your ability to complete the home purchase.
• Loan denial: If your income no longer meets the lender’s requirements, your application may be denied.

If any of these scenarios occur and you’re under contract to sell your current home, you may face legal repercussions if you back out. If you’ve already sold your home, the sale is final.

Steps to Take if You Lose Your Job

If you lose your job during the mortgage process, act quickly to manage the situation:

• Contact your lender: Inform your lender immediately about your job loss. Transparency is crucial.
• Pause your application: Ask your lender to pause your application instead of canceling it to avoid losing fees.
• Look for a new job: Start job hunting as soon as possible. A new job in the same industry with a similar salary may not significantly impact your mortgage process.
• Explore other income sources: Consider side hustles, retirement savings, or other stable income sources. A co-borrower with sufficient income can also help.
• Consider reducing your loan amount: If you haven’t found a home yet, look for a less expensive property or consider a larger down payment.
• Look into other housing options: If your lease is up or you’ve sold your home, prioritize finding short-term housing or a long-term lease.

Can You Change Jobs While Buying a House?

Changing jobs during the mortgage process is possible and may even 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 more information about your job change.

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

Ensure You’re Credit-Ready for a Mortgage

Maintaining a steady income is crucial, but so is having good credit. While it’s possible to get approved for a home loan with a lower credit score, a score in the mid-700s or higher can help you secure better 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 for potential issues.

For any mortgage-related needs, call O1ne Mortgage at 213-732-3074. We’re here to help you navigate through these challenging times with confidence.

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