Buying a Home is a Huge Investment. Make Sure You're Ready.
Purchasing a house is the single largest purchase and investment you will make in your lifetime. When you are ready to apply for your mortgage, make sure that you are aware of all the factors that can affect your ability to qualify for a mortgage approval. So far we have covered the importance of your credit report, credit cards, and debt. Today we will cover another important qualification factor, your employment history.
Why is My Employment History Important?
Lenders want to see that you have a legitimate, steady, and reliable employment history. Typically, lenders will examine your previous two years of employment history, although this time is not absolute as it can vary from lender to lender. Ultimately, your lender wants to determine your risk factor which will indicate your ability to make your payments on time.
What If My Employment History Has Gaps?
If you have gaps in your employment history from changing jobs or being unemployed, it is important for your lender to know. There are circumstances in which there may be exemptions. If the lender cannot use your current employment income, payments from pensions, child support or alimony may be considered as income. If you were planning to make a change with your current employment status, have a discussion with your lender. It may be best to consider holding tight until you have secured your mortgage and home to avoid any delays in your approval process.
How Can I Help My Lender Verify My Employment History?
Lastly, to ensure your employment history your lender will require documentation to verify your employment status, or any sources of income. These documents may include the following and possibly more:
- Month’s worth of pay stubs (or more)
- W-2 forms from the past two years (or more)
- Tax return documents from the past two years (or more)
- Bank statements from the past two months (or more)
Be sure to be upfront with your lender and do not cover anything up as this could actually make for a more difficult process getting approved. If you think you may not be qualified for any reason, have an open discussion with your lender to figure out your options. For more information on the home buying process, check out our other checklists Qualifying for Your Home Purchase and Purchasing the Right Home. Join us next time as we will cover our final factor, capital.
MSI Credit Solutions provides superior credit restoration and comprehensive consulting services that are reliable and affordable. For any questions or to schedule a free credit consultation, contact us at (866) 217-9841.
*The information in this article has been provided strictly for educational purposes.
