The experience of losing a job is stressful in its own right, but if you’re in the middle of the mortgage process, a layoff can create unintended and serious complications. In the best-case scenario, the lender may simply delay the closing process or approve you for a lower amount, but depending on the situation, your loan application may be denied.

Steps to Take if You Lose Your Job

If you get laid off at any point during the mortgage process, it’s important that you act quickly to handle the situation with your lender. Here are some steps you can take:

Contact Your Lender

When you close on a mortgage loan, you sign a document stating that the information on your application is still accurate, so it’s inadvisable to try to hide your job loss. Reach out to your lender immediately to explain the situation.

Pause Your Application

Your lender will provide you with some potential options when you call. Resist the urge to cancel, though, because you may lose the application fee, earnest money, and other fees you’ve incurred during the process. Before you make any decisions, ask the loan officer to pause your application.

Look for a New Job

As soon as you can, start looking for new employment. New jobs can present a risk during the mortgage process, but if it’s in the same industry you were working in before and has a similar salary, it shouldn’t be as big of an issue for your lender.

Look at Other Sources of Income

If you have a side hustle, retirement savings, or other sources of stable income, they may help you avoid having your loan denied outright. If your co-borrower has sufficient income, they could proceed to apply for the loan on their own. If you’re applying alone, adding a co-borrower with sufficient income could help.

Consider Reducing Your Loan Amount

If you haven’t found a home yet, you’ll have some flexibility to look for a less expensive house than you originally wanted. You may also consider a larger down payment, but don’t ignore your immediate financial needs to make the deal go through.

Look into Other Housing Options

If your lease agreement is up, you’re under contract to sell your current home, or you’ve already sold your house, making sure you have shelter now is a top priority. Consider short-term housing options or even long-term lease agreements if you think it’ll take a while to get back on your feet financially.

Can You Change Jobs While Buying a House?

It is possible to change jobs while you’re in the middle of the mortgage process, and it may even be worth it if the new position offers a higher salary or better benefits. That said, switching jobs can impact your approval odds.

Having a steady employment history is crucial, so the lender may want to understand the reason for the change and obtain more detailed information about your past employment and income.

If you’re advancing in your career or you’ve moved to a similar job with a different company within the same industry and your salary hasn’t changed much—or it’s increased—you may not have too much trouble. But if you’re switching to a different career entirely or your income has dropped significantly, it could throw a wrench in your plans to buy a home right now.

Make Sure You’re Credit-Ready for a Mortgage

The importance of having a steady income during the mortgage process cannot be overstated. But it’s also critical that you maintain good credit. It’s possible to get approved for a home loan with a FICO® Score in the low 600s or even the 500s with some loan programs. But a score in the mid-700s or higher can help ensure that you get access to the best mortgage interest rates and other terms.

With Experian’s free credit monitoring service, you’ll get access to your FICO® Score and Experian credit report, along with alerts when changes are made to your report. Review your credit file to determine whether you can make improvements, and continue to monitor your score to spot potential issues as they arise.

Contact O1ne Mortgage for Expert Mortgage Services

At O1ne Mortgage, we understand that life can throw unexpected challenges your way. Our team of experienced loan officers is here to help you navigate the mortgage process, even in difficult times. If you have any questions or need assistance with your mortgage, don’t hesitate to call us at 213-732-3074. We’re committed to helping you achieve your homeownership dreams.