In this market it is key to work with a lender that is well informed and has your best interest at heart. Unfortunately, not every buyer is so fortunate. Today I was surprised when a person I was pre qualifying told me they were leaving their job in 3 weeks and they had no other employment lined up and they would be going back to school. The lender they had been working with told them this would not be a problem because the bank would not find out.
There are two issue with this.
#1 misrepresenting income or continuance of income is fraud. Mortgage fraud is very serious and carries severe penalties.
#2 the bank would find out because every single lender verifies employment right before the loan funds. If the lender finds out there is no longer a job and the borrower does not qualify without it the buyer loses the loan and generally their deposit as well.
There are 3 ways employment is verified on every loan.
#1 Current paystubs and w2′s
#2 The loan processor requests a written or verbal verification of employment before the loan is submitted to underwriting. They contact your employer directly for this
#3 Verbal verification of employment at Funding. They will not fund the loan unless your employer verifies you are still working there.
If you are leaving your job and do not have another job lined up you should not be using that income to qualify for your loan. If you switch jobs in the middle of the loan you need to tell your lender so that they can adjust the transaction. Many people think that if they get through underwriting and they sign loan documents they are in the clear. You are not in the clear until the loan closes and the house has recorded./ Honesty is the best policy. If you are working with a lender that is encouraging you to misrepresent yourself leave that lender quick. Mortgage fraud is serious and no house is worth it.
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has written 157 articles on Ready Bell Home Loans @ Mason McDuffie Mortgage
