The Smooth Loan Process #2010-02

Can I Quit My Job Before We Close? "Is it bad if I quit my job before we close on our loan?" I get this question from borrowers more often than I would expect. I suppose that for those of us in the business, this is kind of a no-brainer but the question comes up enough that I feel like giving the answer and the reason. Yes, it's bad. The reason is that the lender wants a reasonable expectation that the income used for qualifying is likely to continue. On most loans, we'll have to contact the employer to verify that the borrower is still an active employee on the day of funding and closing the loan. Usually, this is done by phone but it can also be done in writing. So if we find out that you have quit, put in your notice or took a leave of absence, the loan is not going to fund. The lender will also verify your start date with the company to make sure there is a proper employment history, but that's another episode. Maybe my sense of humor is off (after all, I am a mortgage nerd), but I think some of the situations we have had with a lack of employment at closing are really funny. Here are some of the responses I've gotten when I asked the buyer why their employer says they are no longer employed: - "I know I got fired, but they owe me two weeks vacation. We close in less than two weeks, so what's the difference?" - "Oh...I didn't think that mattered." - "You said I was pre-approved. I thought that meant I could do whatever I wanted." - " I know you want me to get my job back, but that's not gonna happen. Not the way I quit!" By the way, in all of the cases, the buyers were able to close on their home loans. We just had to verify employment for their new jobs. The Smooth Loan Process lesson for today: Try to avoid changes in your employment status before you close on your home. If there is a change, let your Loan Officer know right away. Harold Perkins The Mortgage Advantage 480-831-1588 Harold@aztma.com