How Changing Jobs Affects Buying a Home in Chicago
For most people, changing employers in Chicago will not really affect the ability to qualify for a real estate mortgage loan. For some home buyers in Chicago, however, the effects of changing jobs can be a huge issue to your mortgage loan application and can deter you from putting in an offer for that condo, or loft you found in Chicago.
If you are a salaried employee here in Chicago who does not earn additional income from commissions, bonuses, or over-time, switching employers should not create a problem when applying for a real estate mortgage loan application. Just make sure to remain in the same line of work here in Chicago. Hopefully, you will be earning a higher salary, which will help you better qualify for a real estate mortgage and on the fast track to finding that perfect Chicago condo, loft, or townhome you have always wanted.
If your income is based on hourly wages and you work a straight forty hours a week without over-time, changing jobs should not create any problems either when applying for a real estate mortgage loan here in Chicago.
If a substantial portion of your income is derived from commissions, you should not change jobs before buying a home loan in Chicago. This has to do with how real estate mortgage loan institutions calculate your income. They average your commissions over the last two years. Changing employers in Chicago creates an uncertainty about your future earnings from commissions. There is no track record from which to produce an average. Even if you are selling the same type of product with essentially the same commission structure, the underwriter cannot be certain that past earnings will accurately reflect future earnings.
Changing jobs would negatively impact your ability to buy a new home here in Chicago.
If a substantial portion of your income on the new job will come from bonuses, you may want to consider delaying an employment change. Chicago real estate mortgage lenders will rarely consider future bonuses as income unless you have been on the same job for two years and have a track record of receiving those bonuses. Then they will average your bonuses over the last two years in calculating your income when you are applying for a mortgage loan here in Chicago. Changing employers means that you do not have the two-year track record necessary to count bonuses as income.
If you have a job here in Chicago and earn an hourly income but rarely work forty hours a week, you should not change jobs. There would be no way to tell how many hours you will work each week on the new job, so there is no way to accurately calculate your income. If you remain on the old job, the lender can just average your earnings. This way you will have a far better change on getting approval and can start shopping for that perfect condo, loft, or townhouse.
Since all Chicago employers award overtime hours differently, your overtime income cannot be determined if you change jobs. If you stay on your present job here in Chicago, your real estate mortgage lender will give you credit for overtime income. That real estate mortgage lender will determine your overtime earnings over the last two years, and then calculate a monthly average.
If you are considering a change to self-employment before buying a new home, think again! Buy that Chicago condo, loft, or townhome first. Chicago real estate mortgage lenders like to see a two-year track record of self-employment income when approving a mortgage loan. Plus, self-employed individuals tend to include a lot of expenses on the Schedule C of their tax returns, especially in the early years of self-employment. While this minimizes your tax obligation to the IRS, it also minimizes your income to qualify for a real estate mortgage loan here in Chicago. If you are considering changing your business from a sole proprietorship to a partnership or corporation, you should also delay that until you purchase your new home in Chicago.