3 Tips for Getting a Mortgage When You’ve Just Gotten a New Job
Mortgage lenders may be hesitant if you’re new to your job. Here’s how to help them get passed that.
There are plenty of good reasons to get a new job — better career growth, more rewarding work, or perhaps even a raise. But while getting a new job may work wonders for you professionally, it could be a deterrent from a mortgage application standpoint.
Mortgage lenders need reassurance that if they loan you money to buy a home, they’ll get paid back. As such, some lenders will favor loan candidates who have been at their jobs for a long time. If you’re new to yours, it could hurt your chances of mortgage approval. But if that’s your situation, here are a few ways to work around it.
1. Present a letter from your employer
If you’re brand new to a job, a lender may wonder how stable it is. But providing a letter attesting to its stable nature at the time of your application could help. If your employer notes that you’re expected to stay on board for the long haul and that the company itself isn’t experiencing any financial hardships, that could be enough to sway a lender that your primary income source is, indeed, a reliable one.
2. Make a larger down payment
The bigger a down payment you make on your home, the less risk your lender takes on. If you’re new to a job and you have the savings to put down, say, 25% or 30% of your home’s purchase price (as opposed to the standard 20%), that could buy your lender enough comfort to approve you as a loan candidate.
3. Provide proof that you’re still in the same industry
It’s one thing to get a new job that seems like a random way to get a paycheck, but it’s another thing to get a new job that builds on your existing skills and experience. If you’re in the latter situation, your new job may not hurt you at all. For example, say you’ve worked in software engineering for seven years, and now, you’ve taken on a new engineering role at a different company that pays better and offers more opportunity. If you show your lender that you haven’t switched industries and are progressing on a clear career path, your new role shouldn’t be much of an issue.
You’ll often hear that it’s best not to get a new job when you’re in the process of applying for a mortgage. But sometimes, these things can’t be helped. If you get a job offer and the company making it needs an answer ASAP, you may not be able to sit on it until your mortgage is approved and actually closes. (Keep in mind that it can easily take 30 to 60 days to close on a home loan.) If that’s the case, use the above tips as your backup plan. The good news is that while a new job can be a hindrance on the road to getting a mortgage, it doesn’t have to be.
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Chances are, interest rates won’t stay put at multi-decade lows for much longer. That’s why taking action today is crucial, whether you’re wanting to refinance and cut your mortgage payment or you’re ready to pull the trigger on a new home purchase.
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