Mortgage Mistake #4 – Changing jobs or, if you are self-employed, your business structure.
Scenario 1: You are an employee with a salary
If you are an employee who receives a regular paycheck for the same amount each pay period, here’s what happens when you change jobs. The lender who is processing your new loan will want to see at least one and perhaps two paychecks from your new job before they will fund your loan.
Scenario 2: You are an employee with a salary, overtime, and bonuses.
The company you moved from, gave you overtime and perhaps bonuses. You have just started a new job which also offers overtime and bonuses but you do not have a history of how much that will be. Just because you earned this fluctuating income from your previous job, does not mean you will receive the same amount on your new one.
In this case, you will only be credited with your base, non-fluctuating income. If your overtime and/or bonuses were substantial, this could mean that you now don’t show sufficient income. Hang tight – don’t change jobs until after you own your new home.
Scenario 3: You are self-employed.
You’ve been self-employed for many years. You never incorporated but claim all our income on your personal tax return. At the suggestion of your accountant, you decided to incorporate one year ago. You make the same amount of money but you show it differently.
You may or may not have a problem. This depends on the lender who is determining your income. Some will insist your corporation is 2 years old. There are others who can work with this change, but it must be in the exact same line of work.
These are just three different stories. Before you make a change you should talk to your mortgage consultant to find out how they will view your particular situation.