What happens if I lose my job before closing on a mortgage? is a question we get asked a lot in our office, and here’s the clear answer you’ve been waiting for.
It can be extremely stressful to lose your job within days of purchasing a home in New Jersey or another state, particularly if you don’t have another source of income.
While finding a new work can help, it doesn’t mean that your lender will approve your home loan while you’re still employed as an employee.
Our experienced real estate attorney in New Jersey has been resolving real estate matters for over 10 years. Curbelo Law with offices in Ridgewood and Newark can become your legal trustable support.
Although it can be stressful, losing your work before closing on a house doesn’t always mean you’ll lose your ideal residence. Here’s what you need to know:
After closing, you are free to quit your job. The mortgage lender has already verified your employment and income, and they have no legal right to prevent you from quitting after the closing is complete.
However, quitting your job before closing could jeopardize your loan. Lenders want to be sure that you can afford the mortgage payments, and losing your job could make you a higher risk borrower. In some cases, the lender may require you to provide additional documentation, such as a severance package or proof of unemployment benefits, to show that you can still afford the mortgage.
It is crucial that you speak with your lender first if you are thinking about leaving your position before closing. They can help you assess whether you still meet the requirements for the loan and can offer you advice on the risks involved.
Here are some additional things to keep in mind:
- The timing of your job loss is important. If you lose your job shortly before closing, the lender may be more likely to deny your loan. However, if you lose your job after closing, you should be able to keep your house as long as you can make the mortgage payments.
- The type of job you lose is also important. If you lose a high-paying job, the lender may be more concerned than if you lose a low-paying job.
- Your credit score and financial history will also be taken into account. If you have a good credit score and a strong financial history, the lender may be more likely to overlook a job loss.
Ultimately, the decision of whether or not to quit your job before closing is a personal one. You need to weigh the risks and benefits carefully and make the decision that is right for you.
Additional Resources
- NerdWallet: What Happens If You Lose Your Job Right Before Closing on a Mortgage?
- Ask MetaFilter: Exactly how soon can I quit my job after closing on a home?
Steps To Take If You Lose Your Job Before Closing A Mortgage
If you’re still unsure about what will happen if I quit my job before my mortgage closes, keep in mind that your lender won’t be able to move forward with the closing unless you have another source of income.
Losing your job doesn’t mean you can’t buy property. However, you must take specific steps to achieve this. Some steps we recommend are:
1# Maintain A Good Credit History
If you lose your job, it’s important to maintain a good FICO credit score or a score that meets your lender’s minimum requirement.
- Late payments lower your credit score. This could result in a higher interest rate or jeopardize your home loan.
- Maintaining your credit can be achieved by allocating your savings toward paying your bills on time, but doing so runs the risk of depleting your funds for down payment and closing costs in New Jersey.
You may be eligible for a skip payment option. Contact your lenders and/or creditors to determine your possibilities.
If you’re eligible, you can skip your payments for a set amount of time without penalty. With this, you can keep your money while protecting your credit score.
Mistake #9 Quitting your job before closing.
FAQ
What happens if you quit your job before closing on a house?
Does quitting your job affect mortgage?
Do lenders verify employment before closing?
What happens if you quit your job before closing on Your House?
It’s possible your lender will not approve your mortgage loan if you choose to quit your job before closing on your house. It’ll hurt your mortgage approval if you don’t have proof of stable income to make monthly payments.
Can You Quit a job before closing a home loan?
Quitting your job before closing will put your mortgage loan at risk. Lenders won’t approve your home loan if you don’t have enough income to make the loan’s monthly payments. You may be able to quit a part-time job if you aren’t using the income to qualify for your loan.
What happens if I Lose my job before closing on a loan?
If you lose your job before closing on the loan, a few different things can happen: Delay in processing your loan: If you’re receiving stable income from another source, or you have a co-borrower whose income is sufficient to meet the lender’s requirements, the lender may decide to continue with the loan process.
Can you change jobs before closing on a mortgage?
Avoid changing jobs until after you’ve completed the mortgage application process and closed on the loan. Switching jobs before closing affects your loan approval process. At best, your closing could be delayed. At worst, you may no longer qualify for the loan. Do lenders verify employment after closing? No.