Losing your job is one of the most stressful life events you can experience. And there’s never a good time to suddenly find yourself unemployed. But should you give up on your plans to get a mortgage if you lose your job in the middle of buying a house? Not necessarily. You have options, and it’s important to review them carefully before making a decision.
Losing your job can be a stressful and scary experience, especially if you’re worried about how you’ll make your mortgage payments. You might be wondering if you’re obligated to tell your mortgage lender about your job loss and what the consequences might be if you don’t.
The short answer is that you’re not legally required to tell your mortgage lender if you lose your job. However it’s generally in your best interest to do so. Here’s why:
Why You Should Tell Your Mortgage Lender
- They can help you find solutions. Your mortgage lender may be able to offer you options to help you stay in your home, such as a loan modification or a forbearance agreement. These options can give you some breathing room to get back on your feet financially.
- They can help you avoid foreclosure. If you don’t tell your mortgage lender about your job loss, and you fall behind on your payments, they may start foreclosure proceedings. This can be a very stressful and expensive process, and it can ultimately lead to you losing your home.
- They can help you protect your credit score. If you default on your mortgage, it can severely damage your credit score. This can make it difficult to get a loan in the future, and it can also increase the interest rates you pay on other loans.
What Happens If You Don’t Tell Your Mortgage Lender
- They may not be able to help you. If your mortgage lender doesn’t know about your job loss, they may not be able to offer you the assistance you need to stay in your home.
- They may start foreclosure proceedings. If you don’t tell your mortgage lender about your job loss, and you fall behind on your payments, they may start foreclosure proceedings. This can be a very stressful and expensive process, and it can ultimately lead to you losing your home.
- They may report your delinquency to credit bureaus. If you default on your mortgage, your mortgage lender may report your delinquency to credit bureaus. This can severely damage your credit score, making it difficult to get a loan in the future and increasing the interest rates you pay on other loans.
What to Do If You Lose Your Job
- Contact your mortgage lender as soon as possible. Let them know about your job loss and ask about your options.
- Gather documentation of your job loss. This may include a termination letter, a pay stub showing your last paycheck, or unemployment benefits documentation.
- Be prepared to discuss your financial situation. Your mortgage lender will want to know about your income, expenses, and assets.
- Be honest and upfront with your mortgage lender. The more information you can provide, the better they will be able to help you.
Although losing your job can be a trying experience, it’s crucial to realize that you’re not by yourself. There are resources available to help you through this tough time. You can improve your chances of remaining in your house and getting back on your feet financially by getting in touch with your mortgage lender and taking initiative.
Here are some additional resources that may be helpful:
- The National Foundation for Credit Counseling: https://www.nfcc.org/
- The Consumer Financial Protection Bureau: https://www.consumerfinance.gov/
- The Department of Housing and Urban Development: https://www.hud.gov/
Should you tell your lender about your job loss?
Yes. Since you will be signing a document at closing certifying that all the information on your application is accurate, you must notify your lender if you lose your job. You might be concerned that losing your job will be difficult and that it will affect your mortgage application. But honesty and transparency are necessary and important when working with your lender. The sooner you inform your lender of your circumstances, the sooner they can assist you in creating a plan.
Other application-related costs
There are certain fees that are usually not refundable, even though many lenders provide a range of complimentary application-related services. Some common examples include home appraisal fees and rate lock fees.
What NOT to tell your LENDER when applying for a MORTGAGE LOAN
FAQ
Should you tell your mortgage lender you lost your job?
What happens when you lose your job and have a mortgage?
Do you have to tell mortgage lender if you quit job?
How do I protect my mortgage if I lose my job?
Can I get a mortgage if I lost my job?
Yes. You are required to let your lender know if you lost your job as you will be signing a document stating all information on your application is accurate at the time of closing. You may worry that your unemployment could jeopardize your mortgage application, and your job loss will present some challenges.
Should I tell my lender about my job loss?
You have options, and it’s important to review them carefully before making a decision. Should you tell your lender about your job loss? Yes. You are required to let your lender know if you lost your job as you will be signing a document stating all information on your application is accurate at the time of closing.
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.
How do you hide a job loss on a mortgage loan?
Steps include: Contact your lender. When you close on a mortgage loan, you sign a document stating that the information on your application is still accurate, so it’s inadvisable to try to hide your job loss. Reach out to your lender immediately to explain the situation. Pause your application.