Can you get a home loan why you are in between job?

[moonsky]

We are moving back to CA beginning of next year and ready to start our house search. Dh will take some time off and won't start to work till 3/11. I talked to a mortgage broker yesterday and was told that the paystub of new job is required, not just only the employment agreement. He can give us the preapproval letter now based on the new salary but won't be able to start a process. Another option is that we get a loan based on Dh's current salary which is significantly lower than new one. We won't be able to afford the house we want with his current salary.

I was thinking about borrowing money from my parents till the loan kicks in. But will the lender pays the money to my parents after the loan approves How does it work? Any thoughts/advice? Thanks!

[khalloc]

I dont think you can really borrow money for a mortgage. When that happens you usually need a letter, a legal letter stating that the $$ was a gift and that you do not need to pay it back. Maybe your parents could co-sign on the loan, and then you could get the mortgage for the house you want. But that would leave your parents liable if you ever default on the mortgage.

[AnnieW625]

I would just wait until ge starts working, it will be easier that way and give you lots of time to look. It's probably just me but I wouldn't sign a loan with my parents.

[mommylamb]

Sounds like you're in the market for a rental for a little while, which isn't necessarily a bad thing. You probably want to wait and make sure your DH likes the new job and that he's going to stick it out there before taking on new housing debt.

[sste]

Moonsky, your dh is a physician heading into private practice, right? Really, think hard about the renting option. Over 3/4 of new physicians LEAVE their first job within 2 years. And those jobs are frequently structured with non-compete clauses so that the physician can't work within the immediate area. We have had multiple friends stuck with over 1.5 hour commutes or having to pay on two homes because they bought immediately.

I know its hard because no one wants to move twice and there is a limited supply of rental houses so you really have to look hard to find a good one. But, in your position, unless you have NO non-compete clause and there are plenty of jobs in the area for your DH, I would not buy a house.

[bostonsmama]

Well, actually, it's worse. If you've (he's) been in your (his) job less than 2 years, sometimes you qualify for crappier rates, less money, etc. I would not have your parents co-sign a loan, nor would I borrow money from them. The best you could do is use it as a down payment, and you couldn't borrow it back out of the house to give it back to your parents. It just doesn't work like that.

I'd say rent, too. There ARE actually plenty of rentals, and they are a good deal if you look around (depending on the area, of course--NYC could be different). Plenty of high-dollar homes that can't sell choose to rent. GL.

[NancyJ_redo]

Moonsky, your dh is a physician heading into private practice, right? Really, think hard about the renting option. Over 3/4 of new physicians LEAVE their first job within 2 years. And those jobs are frequently structured with non-compete clauses so that the physician can't work within the immediate area. We have had multiple friends stuck with over 1.5 hour commutes or having to pay on two homes because they bought immediately.

I know its hard because no one wants to move twice and there is a limited supply of rental houses so you really have to look hard to find a good one. But, in your position, unless you have NO non-compete clause and there are plenty of jobs in the area for your DH, I would not buy a house.

FWIW, non-competes are illegal in CA so that wouldn't be an issue, but I agree with the rest of your thinking.

[ncat]

We couldn't refinance (to a lower rate) after I lost a job several years ago, so I think it would be really hard to get a new loan.

[rachelh]

I used to be a mortgage underwriter but the industry has changed quite a bit since I have done that so it could be this no longer applies. Banks generally expect that when someone is relocating that they will be a time period in which the home buyer is not working and will accept an offer letter with an actual salary number on it as well as start date. I don't know what the time period is from when you buy/move to when he would start but I would think a gap of two weeks would be acceptable. They may also want to see a paycheck once he starts his new job eventhough you closed already.

Again, could be this information is not accurate anymore.

[rachelh]

Well, actually, it's worse. If you've (he's) been in your (his) job less than 2 years, sometimes you qualify for crappier rates, less money, etc.

I have never heard of this. If he has not a had a consecutive two year work history (which can be at a combination of employers), you may not qualify for a loan. Although, if you have been in college studying towards a profession (ie. doctor, lawyer, nurse etc) then applied for a mortgage with less than a two year work history, his schooling would be counted towards the two year work history. Could be a tactic used my mortgage reps to give people higher rates.

[NancyJ_redo]

We couldn't refinance (to a lower rate) after I lost a job several years ago, so I think it would be really hard to get a new loan.

I just left my job a month ago and started a refi last week. As long as our debt-to-income ratio was less than 41%, they were ok with just one income (DH is still employed). But I realize mine is a slightly different scenario than OP's so my experience isn't necessarily relevant.

[dukie41181]

I just left my job a month ago and started a refi last week. As long as our debt-to-income ratio was less than 41%, they were ok with just one income (DH is still employed). But I realize mine is a slightly different scenario than OP's so my experience isn't necessarily relevant.

As long as you can still qualify for a loan with just one income, it doesn't matter about the other person's status. Its an issue when you need to consider both incomes for qualification purposes. I'm guessing that since the move is employment related nd the family will be uprooted, the income will be needed to qualify and thus important. My husband is in the mortgage industry and said that in many cases all you need is to be able to show 30 days employment history in a particular position but they will want to see a full 2 year employment history in general. He did say that the full 2 years is often asked for when they are needing to qualify based on bonuses, commissions or other non-salary pay.

[dukie41181]

T
Moonsky, your dh is a physician heading into private practice, right? Really, think hard about the renting option. Over 3/4 of new physicians LEAVE their first job within 2 years. And those jobs are frequently structured with non-compete clauses so that the physician can't work within the immediate area. We have had multiple friends stuck with over 1.5 hour commutes or having to pay on two homes because they bought immediately.

I know its hard because no one wants to move twice and there is a limited supply of rental houses so you really have to look hard to find a good one. But, in your position, unless you have NO non-compete clause and there are plenty of jobs in the area for your DH, I would not buy a house.

If it is true that we are talking about a situation where he is joining or starting a private practice, it would be a bit more complicate according to my husband. Will there be any sort of ownership interest he will be taking in the practice? If he has more than 24.9% ownership interest he will need to show 2 years tax returns for both personal and business. If there is no ownership or 24.9% or less then he will need to be able to show 30 day employment history in the practice. No matter what the situation, it sounds like you'll not want to buy at this point unless you'll be happy with a less expensive house. When you talk about borrowing $ from your family, I'm not clear if you're talking about gift money or doing something like a privately held mortgage. You could do a privately held mortgage with legal assistance in drawing up documents and a mortgage compay could pay off that mortgage in a refinance. There is no way gift money would help you at this point without MAJOR risk. Husband says you could use the gift money as a down payment and mortgage the rest HOPING that you could refinance after 12 months and pull the gift money back out and do whatever (pay it back, save, etc.). This would help you afford a home that would be more expensive. However, he said he wouldn't ever do that (especially in CA right now) due to home values but its a creative option if you like to gamble.

[Sillygirl]

I'm trying to remember how we did it, because we did buy our current house after I had a job, but before I had started. We may have qualified based on my fellowship salary and DH's salary before we moved. I second the suggestion to WAIT before you buy though. I have been very lucky in my practice but many physicians have come and gone in the time I have been here (just three years!) Also, there's a big jump in salary when you start private practice, and it takes a few years to adjust to that. It seems like a huge amount at the time, but you'll be surprised how perceptions shift. You might not want to lock into a big mortgage right now.

We bought far below what we would have qualified for and have been very happy with our house.

[moonsky]

Thanks for all wonderful advice. There are no non-compete clauses on the contract. As price of houses in that area and the interest are very low right now, we are trying to buy a house. He also received several offers from other practices in the same area. So, if this doesn't work out, he can still switch to a different one and we still live in the same area. The commute might be a little bit longer but still less than an hour commute.