Your occupation and your mortgage
By Justin Hunter
Unless you have inherited a significant amount of money
or have saved up for a really, really long time, you
will probably need some help financing
your home purchase.
Applying
for a mortgage can be a long and exhausting process
as you stay up late at night scouring the Internet for
just about every article and every piece of feedback
from various borrowers’ experience with a variety
of loan programs.
Unfortunately, many potential borrowers have a much
greater concern involving their mortgage, and that is
being accepted. There are a number of factors that are
considered when an underwriter determines the acceptability
of a borrower, some weigh heavier than others.
The article, “How Your Job Impacts Your Ability
To Get a Mortgage,” written by Raynor James and
posted on ezinearticles.com explains how your personal
credit is not the only thing that determines mortgage
acceptability.
“When you are ready to buy your first home
or move up to a bigger, better property, you need to
consider your financing options. While many things go
into finding the best loan, most people are first concerned
about actually being approved for a loan. One of the
factors that is critical when an underwriter analyzes
your loan application is your employment status. Mortgages
are all about risk in the eyes of a lender. Your employment
status is a huge factor in evaluating that risk.”
This focus on employment status is broken into three
categories. The first is the salaried employee who receives
the same monthly wage. The second is the self-employed
individual who owns his or her own business and has
fluctuating monthly revenues. The third is the salesperson,
or someone who lives off commissions and who also receives
fluctuating monthly revenues based on personal production
each month.
“Salaried employees are the simplest for lenders
to evaluate. The annual earnings of this person are
a set figure. Lenders are very comfortable with this
designation because they can accurately predict the
money you have coming in relation to debts and so on.”
Salaried employees also suggest that you are a reliable
person, otherwise you would not receive the “salary”
status and this is importance since stability is everything
in the eyes of lenders.
Self-employed individuals tend to show a general range
of earnings rather than a predictable income. You also
deduct just about everything you can when it comes to
taxes.
This may negatively impact your mortgage application
because your reported income will be low, even though
you may make more than a salaried employee. As a result,
your lender will want to see past tax returns, bank
account statements and other financial documents for
the past two years. And, if possible, do not change
your profession or at least occupational focus for at
least two years prior to applying for the mortgage.
Commissioned employees used to have the most difficult
time getting approved for mortgage, but have become
more and more common these days as corporate culture
changes. Thus, lenders
are much more comfortable accepting commissioned employees
as long as the two-year rule is upheld.
“If you are planning on buying a home in the next
few years, stability is very important. While there
are exceptions to every rule, your best course of action
is to stay the course with employment before apply for
a loan. You can always make changes after being approved.”
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