How Your New Job Affects Your Chances of Getting a Mortgage

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Changing jobs is a natural part of a long and eventful career. But if you’re trying to impress a mortgage lender, you need to know some of the basics when it comes to employment.

First, mortgage companies typically want to see working applicants who have been in the same field at least two years. The reason: A solid two-year work history is a good indicator of one’s financial stability. Here are some common employment scenarios and how they may play out with lenders:

  1. In college, you studied a particular field and now have a job in that field. This scenario would be acceptable in nearly every mortgage loan program as long as there’s documentation.
  2. You’ve just changed jobs within the same field but are earning less than before. This scenario would be acceptable, and the lender would use your current income to see if you qualify for loans.
  3. You’ve just changed jobs — and career field. This scenario would be questionable, and your ability to qualify would depend on how much the lender was willing to help you.
  4. Your new job situation is temporary. This income would be averaged as if you were a salaried employee who switched to impermanent income.

What Paperwork You Need

In most cases, other than college, lenders want to see documentation on your new job and income. Paperwork for a new job should be highly detailed and include your new title, new role and salary. More specifically, mortgage companies expect paperwork with your:

  • Start date
  • An offer letter with compensation
  • A pay stub
  • Verbal confirmation of your employment, which will come later

All these are critical, especially if the job you took is brand-new and you have no previous history of earning a particular type of income, i.e. going from a salary to an hourly wage or receiving a raise. You should be able to get pre-approved as long as the job has a start date; the key is providing the items with timely documentation.

The top mortgage programs, including conventional, Federal Housing Administration and Jumbo, all follow the same requirements for using brand-new job income for applicants. It doesn’t matter if you’re buying a home for the first time or refinancing a home you own.

But if you’re already in the process of applying for a mortgage, it goes without saying you generally shouldn’t change jobs in the middle of the process. If you must or know a possible change to your financial picture is in the works, handle that first, and then you can begin the mortgage application process.

Changing jobs in the middle of the process won’t just delay things but can potentially impede your ability to secure financing. Another smart alternative would be to secure mortgage loan financing then make a job change when you have a low-rate, low-cost home loan you can handle — despite any changes to your income.

Remember, too, a good credit score can help you qualify for the best terms and conditions on a mortgage. You can see where you currently stand by viewing your two credit scores for free, updated each month.

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The Average American Has 7.2 Jobs by Age 28

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Feel like you’re bouncing around between jobs? Have no fear, you are hardly alone. A typical young adult in the U.S. has held an average of 7.2 jobs by age 28, new research shows, which is roughly equivalent to having one new employer each year.

The study, released Friday by the U.S. Bureau of Labor Statistics, examined a nationally representative group of 9,000 young men and women born between 1980 and 1984.

As you’d expect, the job change rates slow as young adults age, but not much: “Individuals held an average of 3.9 jobs in the four-year period from ages 18 to 21. The number of jobs individuals held dropped to 2.7 in the three-year period from ages 22 to 24, and then dropped further to 2.5 in the four-year period from ages 25 to 28,” the report said.

In other words, even into their late 20s, young adults held onto their jobs, on average, for only about 18 months. A “job” in the survey is defined as a period of work with a specific employer; being promoted at the same place of employment would not constitute a new job in this research.

Surprisingly, the rapid rate of job change doesn’t vary much among gender and doesn’t change much among men despite their level of educational attainment. On the other hand, women who spent more time in school changed jobs more frequently.

“Women with a bachelor’s degree held eight jobs from ages 18 through 28, compared with 5.6 jobs for female high school dropouts,” the study found.

People with lower levels of educational attainment see their jobs end quicker. Female high school dropouts held jobs for the shortest duration, with 52% of jobs ending in less than six months, for example.

Job change rate didn’t vary much among race. Hispanic or Latino individuals in the group held 6.5 jobs during the 10-year span while African Americans held 6.8 and whites held 7.5. Education levels didn’t affect whites or Hispanics but did affect African-Americans. Members of that group held only five jobs when failing to earn a high school diploma, but 7.1 when earning a college degree or higher.

Of course, the better question is: Are people job hopping more in today’s economy? Job hopping data isn’t actually that easy to come by. The Bureau of Labor Statistics does not have data on the number of jobs held during an average American’s lifetime, for example, despite persistent conventional wisdom that adults today will undertake multiple careers — up to seven! — before they retire.

However, a similar study released last year offers some helpful context. Baby boomers born between 1957 and 1964 held 11.7 jobs from ages 18 to 48. They also held 5.5 jobs from ages 18 to 24. There was no 18 to 28 calculation, so an apples-to-apples comparison isn’t possible. But data on the boomers suggests millennials aren’t job hopping that much more than their parents.

No matter your demographic, it’s a good idea to check your credit before your start a job search, since some employers pull a version of your credit report as part of the job application process. You can see where your credit currently stands by pulling your credit reports for free each year at AnnualCreditReport.com or viewing your free credit report summary, updated each month, on Credit.com.

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1 in 5 Workers Plan to Get a New Job in 2016

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America’s workforce is itching for new opportunities, with 21% saying they want a new job in 2016, according to a CareerBuilder survey. Young people feel particularly antsy, with 30% of 18- to 34-year-olds saying they expect to leave their employer in 2016, up from 23% last year.

In 2014, only 16% of workers said they planned to move on in the new year, so turnover could increase in 2016. (The data come from an online poll of 3,252 workers conducted between Nov. 4 and Dec. 1 of this year.) More than a third (34%) of respondents said they regularly seek new opportunities even though they’re employed.

It’s important to note that if you’re evaluating job prospects, some employers run credit checks. So, just as you update career info on LinkedIn, make a habit of checking your credit before your next job search. Your new employer may not care, but it’s wise to keep tabs just in case. You can get free copies of your credit reports each year on AnnualCreditReport.com and check your credit score for free each month on Credit.com.

In another CareerBuilder survey, workers shared their career resolutions. The most popular pertained to money, with 38% saying they want to save more of their paychecks in 2016, down from 42% the year prior. Meanwhile, 28% want less stress, while 26% are hoping for a raise or promotion.

Whether your plans involve searching for jobs or moving up the career ladder, be sure to set realistic goals. The same goes for financial resolutions: If you want to get out of debt, save more or improve your credit score, start by making small changes you’ll stick with.

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