Originally posted by @Johnny Mack:
I’m currently looking at closing on a house hack in the next couple of weeks in PA. I’m an aircraft mechanic for a major airline and if there is no bailout I will be laid off. Good news is my old job called me and asked me to come back if I am laid off, I would be an aircraft mechanic there as well. My apartment lease is up on the first week of October and I’m wondering if I should tell the lender. If I am laid off, and if the seller will still finance the deal, or even if the seller wants to continue, it would be well beyond the end of my lease. Should I tell the lender before October 1st? What would they do if I don’t tell them and my current employer tells them that I’m on the list for layoffs when they verify my employment again right before closing? What is the process after I start at the old job? Thanks for any help.
I commend you for accomplishing so much. Having money in the bank, an employer that wants you back and a backup plan, cures a lot of ills. ;-)
First, a day or two before closing the lender *Will check with your employer to verify that they plan on having you employed there for the next 6 months or more. That is standard underwriting. If nothing is said to you by your employer and the loan closes, "no harm no foul". Life is good.
So, you don't need to do anything unless you hear that you are going to be "riffed" (reduction in force) by your employer. I'll mention how to handle that further down.
Second, If you hear nothing from your employer, and later your loan has been "denied" by the bank, that likely means your employer doesn't want you to know you are being laid off or isn't sure about laying you off. So, If you do hear from your employer that you will be laid off in less than 6 months, you tell your mortgage broker. They are going to find out anyway unless your current employer is willing to lie on a federal form, (don't count on that ;-). Tell the mortgage broker you have a job waiting and ask for guidance. Ask, "Do I wait for the layoff and then accept the job at my previous employer or do I quit and take the other job immediately?". Your broker wants the loan to close as much as you do and should know the impact on underwriting that each option has.
The likely suggestion will be to switch to the other company. Underwriting may want to see a letter of employment from the "new" company. If you are moving into a substantially similar position in the same industry, even if it isn't the same company, underwriting should approve the closing if it isn't a reduction in pay. However, it may delay closing for a week or two.
Depending on the circumstances you may need an addendum from the seller allowing the closing to be delayed.
If the loan is "Denied" at the last minute and no reason is given, perhaps your employer has instructed them not to tell you for any number of reasons that they aren't guaranteeing 6 months of employment for you. You will get a letter of denial from the bank in the mail with the reasons for the denial. Don't wait for the letter. If you hear "We can't close" or "We aren't closing" you immediately tell your mortgage broker you are aware that the company may be laying some people off, and that you have already made plans to switch to your previous employer. Your broker should be able to discuss the possibility of saving the loan at that point. If he says that is what is needed, just following through and you will be okay.
On the other hand, if the bank can't close for some *Other reason (bank reserves too low, Federal intervention into their portfolio, change in market conditions) you can probably still qualify with another lender. Sometimes, banks *Can't close because of things *They have done that are unrelated to you.
You are the kind of guy that will make things work, so I wish the best for you.
