Want to switch jobs but lender said no.. Help!

Buying & Selling Real Estate
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Want to switch jobs but lender said no.. Help!

Seth B.
Madison, WI · Member since 2013 · 38 posts · 3 votes

Hello all!

I just got back from a home buyers seminar at BMO|Harris Bank. No one showed up so it ended up being me with an agent, lender, and insurance agent. It was really informative meeting for me because it was tailored around me. Lo and behold I may have even found the so called "team"...

Anyways, before I left I was talking to the lender about pre approval and my current job. I currently work in a staffing company and absolutely hate it! It is a soul sucking, 50 hours a week, and my co workers there are just bad.

I have the opportunity to get into a line of work that I am much more passionate about, but it will come at a little bit of a cost. The base salary will be a bit lower (both of these jobs are sales gigs and are base+commission).

When I told this to the lender he advised me that I should not make the switch until I get my first property because it will look bad to the banks that I am switching to a lower paying job. I have been at the staffing company 2.5 years (I'm 26 so not a lot of professional work experience to begin with.. about 4.5 years to be exact).

I wanted to check in with all of you and see what your take on this is. Will I be screwed if I make this jump? I guess I could stay at my current place, but I literally hate it soooooo much! I feel like the guy from office space there.

According to mint.com I have a positive net worth so I'm not in a bad financial situation at all. I don't make a lot of money, but my expenses are pretty low too.

Any insight would be greatly appreciated! And while we are on the topic, should I even be dealing with BMO|Harris Bank? I know my Dad absolutely hates them, and he is not the only person I have heard this from.

Thanks again!

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Xing Zhu
Durham, NC · Member since 2012 · 498 posts · 48 votes
12y

I would say for a person of your age, job should be a far more important consideration than a mortgage. Of course, if you can get both with merely a couple months of delay of the new job, with no risk of losing the opportunity, you should go for both.

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  • Brant Richardson
    Investor · Santa Barbara, CA · Member since 2013 · 658 posts · 315 votes
    12y

    When you are in a new job there is the risk that the company will not like you and fire you, then you can't pay your mortgage. The bank sees that as risk. If you are well established at your job then that scenario is less likely and you are a less risky client. There are a lot of other factors that could make you less risky like no other debt (car payment, school loans, credit cards), a high credit score, or a big cash reserve. If you had enough cash left over after you made your down payment to service your mortgage and living expenses for 6 months then you would look good even if you changed jobs. If you are barely qualifying as it is then you should tuff out your current job for a little longer. Motivation to find a deal sooner!

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  • Edward Burns
    Rockford, IL · Member since 2013 · 330 posts · 62 votes
    12y

    The lending officer is correct. Changing jobs will raise a big red flag right now. Banks look at assets, salary and stability when making a loan. I would suggest you hold off until after the property is bought and the loan papers signed and finalized. Then you can change jobs without any problem. It is not necessarily that the bank will automatic deny the loan, but does increase the possibly, so why risk it.

    Big regional and national banks are more fixed in their ways and therefore less flexible to the needs of some of their customers. This does not mean that they are bad at what they do, just that some people prefer more individualized service. Also local banks, usually have better feel for the local community. Whereas big banks try to fit it rules to a greater area.

    0Reply
  • Seth B.
    OP
    Madison, WI · Member since 2013 · 38 posts · 3 votes
    12y

    Great thanks so much for the quick responses!

    I guess the only difference with my situation is that the "new" job that I would be taking is actually the job I left when I moved to the staffing industry. My uncle is the COO so I can get back in no problem and I wouldn't be at risk of getting fired. I killed it when I was there last time. I was just young and dumb and thought I could leave to find something with more potential. Money wise there is more potential at the staffing company, but at the cost of my sanity.

    Would that make any difference?

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  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    12y

    Why don't you close the loan and then switch jobs? That isn't really an issue as getting the job isn't a done deal, you'd just like to change.

    The rule for a new job is being in the same line of work as previously employed at the new pay rate. The bank is likely saying no due to the ower pay and commission start up in a new job. :)

    0Reply
  • Xing Zhu
    Durham, NC · Member since 2012 · 498 posts · 48 votes
    12y

    I would say for a person of your age, job should be a far more important consideration than a mortgage. Of course, if you can get both with merely a couple months of delay of the new job, with no risk of losing the opportunity, you should go for both.

    1Reply
  • Mike Gibson
    Real Estate Investor · Grove (Grand Lake), OK · Member since 2013 · 10 posts · 1 vote
    12y

    How about finding a house that you like and then leasing it with an option to buy. That serves several purposes: (1) It will a allow you time at your new job so if you decide to get a mortgage and exercise your option to buy, you will have 3+ years on the job and (2) during your lease period, you will have the opportunity to make sure that the market is going in the direction you want. At your young age, if I were you, I would want to keep my options (pardon the play on words) open and not tie myself down to a mortgage.

    0Reply
  • Kyle Hipp
    Investor · Appleton, WI · Member since 2012 · 1k+ posts · 464 votes
    12y

    I would say buy your first place and then look for your new job. I left my old employer about a year ago, then got a different job 4 weeks later. Then a different job in my original field (millwright) at higher pay in the middle of February this year. I bought my personal residence shortly after and have had 6 real estate related closings in the last year. I had to write the underwriter and explaination of my job moves for purchasing my home but everything else was smooth as can be. Usually they require you make the same or more money and be in the same field.

    0Reply
  • Eric Bosworth
    Investor · Hopkinton, MA · Member since 2013 · 18 posts · 23 votes
    12y

    @Kyle Hipp How would you advise doing this if you needed to move before investing? My situation is similar to Seth's except that I am currently living outside the country. In order to begin, I would need to switch jobs, and living outside the country makes it hard to buy first. Is my only option just waiting a few years after switching?

    0Reply
  • Ralph R.
    Investor · Bethel, AK · Member since 2013 · 1k+ posts · 852 votes
    12y

    It has been my expierience that mortgage companys want 2 years in a job in a new field before they will consider the income for repayment of the loan. When I first started investing they wouldn't consider rent's from my properties as income until I had declared it as income on 2 consecutive years income taxes. Same thing goes for your spouse. My wife had to be in her job 2 years before they would consider her income for any new loans.
    RR

    0Reply
  • Kyle Hipp
    Investor · Appleton, WI · Member since 2012 · 1k+ posts · 464 votes
    12y

    Eric, when you move back to the states, if you get a job in the same field that you had overseas you should be bankable provided everything looks decent on paper. If you are moving into another field, banks typically want 2 year history at that job or in that field, showing upgrade moves if with different employers. If your financials are in great shape and you can out down more that the standard 20% - 25% then you might be bankable sooner than those two years. It would be important to have a relationship with the bank in which you are seeking financing. If you are not currently banking with a bank you will bank with when moving back I would set up a new account with a local bank or credit union as soon as you get back to the states. Different financial institutions will have different policies.

    0Reply
  • Mike Gibson
    Real Estate Investor · Grove (Grand Lake), OK · Member since 2013 · 10 posts · 1 vote
    12y

    Eric - I go back to a post I made earlier in this thread. With so many creative ways to buy real estate, i.e., lease purchase, owner financing, sub2, etc., which don't require qualifying for a loan, I would concentrate on that. Plus, educating yourself in those property acquisition methods could go a long way in helping create a real estate investor business, if you'd like.

    0Reply
  • Eric Bosworth
    Investor · Hopkinton, MA · Member since 2013 · 18 posts · 23 votes
    12y

    Thanks for the info. It may actually be in my best interest to see if I can transfer back to the states with the same company for a little while. That would at least give me the continued job history and ability to physically see what I buy beforehand :p

    0Reply
  • Seth B.
    OP
    Madison, WI · Member since 2013 · 38 posts · 3 votes
    12y

    Thread hijack!

    Well this is unfortunate. I am having a hard time grasping this process because in theory I could just "wait it out" till I get the approval then just switch jobs? How does that make sense? What happens if I switch jobs then get fired right after the approval? I would think just looking at the persons overall network and their spending habits would be a better picture than job history.

    Or am missing something?

    Also, do I have to wait till the actual approval or just the pre approval? Thanks

    0Reply
  • Edward Burns
    Rockford, IL · Member since 2013 · 330 posts · 62 votes
    12y

    Wait it out until the actual loan papers are signed. Usually at the property closing. In addition, since buying a property and moving creates a substantial upheaval in life, adding a job-change just will increase the stress load.

    A pre-approval means that the bank believes your current circumstances to be such that a loan is probable but they base this decision on preliminary information. Only when the loan is applied for do they do full due diligence and make their formal decision. If the information changes while they are processing the loan papers and they become aware of them they would have to start the process over.

    0Reply
  • Shane Johnson
    Hudson, WI · Member since 2012 · 189 posts · 30 votes
    12y

    what they said. buy something then switch. dont rush to buy a piece of crap though.

    FYI to anyone - most banks will want 2 years of W2's if you are in sales.

    0Reply
  • Shane Johnson
    Hudson, WI · Member since 2012 · 189 posts · 30 votes
    12y

    @Eric Bosworth

    Per normal thread etiquette, please just start your own thread, instead of thread jacking.

    0Reply
  • Shane Johnson
    Hudson, WI · Member since 2012 · 189 posts · 30 votes
    12y

    @Seth B.

    I would wait until you close on the home. They verify last two years tax returns, and YTD income upon pre-approval, and then if so many days pass, they could potentially want to verify again. Suck it up bro. You got this.

    0Reply
  • Seth B.
    OP
    Madison, WI · Member since 2013 · 38 posts · 3 votes
    12y

    @Shane Johnson

    Yeah you are right. I need to just stick with it.. I guess it will be a motivating factor to find a property sooner than later like others have said, but at the same time I don't want to completely rush and get a bad property.

    The challenge I'm having is that it's hard to find good property in Madison. I think I have come across a few that look like they could work, but I wish I could go out to Milwaukee. BUT in order to do that I'd have to get a new job, and I can't do that now.

    0Reply
  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    12y
    Originally posted by Seth Barthen:
    The challenge I'm having is that it's hard to find good property in Madison. I think I have come across a few that look like they could work, but I wish I could go out to Milwaukee. BUT in order to do that I'd have to get a new job, and I can't do that now.

    What makes it such that in order to invest in Milwaukee you have to get a new job?

    Podcast Guest on Show #29
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  • Ramon Jenkins
    Real Estate Agent · Milwaukee County, WI · Member since 2009 · 3k+ posts · 525 votes
    12y

    I would check with several lenders besides BMO

    Keep employment until you closed on dream purchase

    Ask your uncle to possible hold your new position until July 1, 2014 ( est )

    Steps :

    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

    firm up your current lending options

    look for new purchase

    property under contract

    close on new transaction

    determine if you truly need to change professions

    Just my two cents

    0Reply
  • Seth B.
    OP
    Madison, WI · Member since 2013 · 38 posts · 3 votes
    12y
    Originally posted by Dawn Anastasi:
    Originally posted by Seth Barthen:
    The challenge I'm having is that it's hard to find good property in Madison. I think I have come across a few that look like they could work, but I wish I could go out to Milwaukee. BUT in order to do that I'd have to get a new job, and I can't do that now.

    What makes it such that in order to invest in Milwaukee you have to get a new job?

    Hey Dawn!

    Well my thought process is that I don't want to commute an hour and a half one way to get to my current job. That alone would kill my income just in gas bills. I want to live in one side of the duplex. So if I moved out to MKE I'd need to get a new job, right? . So I'm not sure how I'd make that work.

    0Reply
  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    12y
    Originally posted by Seth Barthen:
    Well my thought process is that I don't want to commute an hour and a half one way to get to my current job. That alone would kill my income just in gas bills. I want to live in one side of the duplex. So if I moved out to MKE I'd need to get a new job, right? . So I'm not sure how I'd make that work.

    Sorry, I missed the part about you wanting to live in one side of a duplex.

    Podcast Guest on Show #29
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  • Seth B.
    OP
    Madison, WI · Member since 2013 · 38 posts · 3 votes
    12y
    Originally posted by Jenkins Ramon:
    I would check with several lenders besides BMO

    Keep employment until you closed on dream purchase

    Ask your uncle to possible hold your new position until July 1, 2014 ( est )

    Steps :

    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

    firm up your current lending options

    look for new purchase

    property under contract

    close on new transaction

    determine if you truly need to change professions

    Just my two cents

    Thanks for the advice Ramon! That's kind of what I was thinking at this point. If I could just save myself a seat at that job I think I'd be good to go. I'll keep you all posted on the progress.

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