What if I Lose My Job While House Hunting?
It’s no secret that things move quickly in today’s real estate market. New listings have multiple offers within hours of hitting the market — if they even make it to the market. Success requires having everything in order so you’re ready to act when your dream home appears.
Unfortunately, losing a job can derail your house hunt or mortgage process. Lenders place a lot of importance on having two years of job history, so a job loss can be especially scary for hopeful homebuyers. The good news is there are plenty of steps you can take to keep your homebuying dreams intact!
Communicating Your Job Loss
Communication is arguably the most important action to commit to during the homebuying process. As soon as you lose your job, make sure to tell your real estate agent and lender. These people can’t help you if they don’t know you need help! Upfront communication will make an unexpected job loss much easier to manage.
A seasoned real estate agent can help you manage your expectations for finding a home. If you lose your job while you’re house hunting, your agent can help you reevaluate your goals and timeline. If you're already under contract for a house, your agent can advise you on the correct steps to take.
If you lose your job during the mortgage process, communicating with your lender is required. Your employment history and income are vital pieces of your mortgage approval. You’ll be required to sign a document stating that this information on your original application is still accurate. Instead of hiding your bad news, build trust with your lender by being upfront. Most lenders will be willing to work with you as you find a new job and get back on track.
Setting Realistic Expectations
After you talk with your real estate agent and lender, it’s important to set realistic expectations so you can avoid unnecessary stress.
- Be patient: Your application process is most likely going to be delayed. Lenders will need time to evaluate the situation, including your job history, other sources of income, and savings.
- Know that pausing isn’t giving up: The best thing to do (and perhaps your only option) is to pause your application process. This will give you time to find new employment or additional forms of income. Pausing your application provides you space to take care of what needs to be done. Job changes don’t happen overnight, so recognize that this process isn’t going to be a quick fix.
- Re-evaluate your budget: Losing a job and getting a new one are natural times to reevaluate your budget. If your spouse has a job, you may be able to keep looking with a lower budget. If you land a job with a higher income, you may see a positive effect on your loan application.
- Consider cancellation: Fortunately, you are not required to finish the application process just because you started it. In some cases, cancellation is your best option. If you do have to cancel your application, be prepared to pay for some of the fees that went towards your application.
Securing New Employment
Losing a job during your house hunting efforts doesn’t have to mean throwing in the towel. Working with an employment agency or recruiter can be a great way to get you in front of employers quickly. A recruiter will evaluate your skill sets, job history, and income expectations and show you employment options that match your profile. You may even work with several recruiters to find the widest range of options.
Polishing your resume is another quick way to stand out to potential employers. A resume that is easy to read, cleanly formatted, and up to date will signal to potential employers that you are professional and organized.
While you’re at it, make sure to update your LinkedIn profile. You know how you’re always told that your resume should have keywords from your industry in it? It can be even more important on your LinkedIn profile. Recruiters use LinkedIn to search for candidates. So, if your profile has the right keywords, recruiters may start asking you to apply for jobs.
Moving Forward with a New Job
Landing a new role can be exciting and a huge relief after losing a job. Once you officially accept your new position, it’s time to do some more communicating.
Discuss all the details — start date, position title, income, employment type — with both your lender and agent. Depending on the details of your application, you may be able to resume your house hunting process. If not, you'll just need to spend some time at your new job before the lenders can move forward with your application. Work with your agent to adjust your budget and goals if your income affects the price range of houses you can afford.
The home buying process can take lots of twists and turns and can be emotionally exhausting. Be patient with the process, and take it one step at a time. Job loss is not the end of the road. If you use some of the steps above, you can increase your chances of keeping the buying process on track. Most importantly — don’t give up!
Need to Learn More About Buying a House?
The homebuying process can be full of twists and turns. The best way to prepare for the unexpected is to understand every stage of the journey. Our Homebuyer Education course will teach you what to expect, how to prepare for homeowner expenses, post-purchase tips, and more. Get started as an online student today!