Your Mortgage : Tips for Home-Buying Career Changers

Are you one of the many Americans who foresee both a career change and a home purchase in the near future?

Then good timing on your part could be imperative if you are to obtain a mortgage, home finance experts emphasize.

“Lenders like stability. They don’t like change,” said Sidney Lenz, an executive vice president for Countrywide Funding Corp.

If you’re on the verge of a major career transition, it can make a lot of sense to buy the home before you do the work move, according to the experts.

That’s because a job change always casts doubt in a lender’s mind about a mortgage applicant’s future earning potential. This is particularly true if the change is a major shift.

Lenders’ eyebrows rise least when they learn that a loan applicant has recently moved from one salaried position to another similar, or better, position.

But they frighten easily when they learn that a potential borrower has recently made a change in fields, moved into a commissioned sales position or gone self-employed.

In fact, many mortgage lenders routinely reject loan applications that are based on the income of self-employed people who have been on their own for less than two years, said Lenz, author of “Your Money and Your Home,” a paperback book put out by Griffin Publishing.

“You’ll need a track record for your new business before you apply for a mortgage,” Lenz said.

Of course, there are exceptions to the usual rules of mortgage lending. Most lenders operate under general “guidelines” established by the investors who will one day own the loans they make. And those guidelines are hardly cast in concrete.

Still, it can be very tough to talk a lender into making you a mortgage if you’ve just left a 10-year-career as a schoolteacher and now intend to establish your own printing company.

Even moving from one salaried position in the teaching field to another in the printing industry could raise doubts in your lender’s mind about your ability to succeed in the future. That’s because you have no proven track record in the printing field.

Moving from one commission-driven job to another can also be a problem--even if you’re staying within the same field. That’s because employers in commission areas have less to lose if a person they engage fails to perform than does the employer who screens applicants for a salaried job.

You may have been highly successful selling Hondas for 10 years and may simply have moved to position selling Chevrolets. But unless you can show that the commission plan offered by both companies is roughly the same, your lender will worry that your income may slump at the new dealership, said Lenz of Countrywide.

Your best prospects for obtaining a mortgage in the immediate aftermath of a job change involve a switch from one salaried position to another such job in the same field. Your lender may not even blink when you tell him you’ve just gone from a nursing position at Hospital A to another at Hospital B -- even if the job change takes you across the country.

But for most career-changers seeking to safeguard their chances of financing a home, caution is the key. Here are five pointers from the experts:

--No. 1: Get a lender’s general reading on your potential career change before you make your career move.

You don’t have to wait until you have a home picked out to telephone a lender. These days, many lenders willingly offer free counseling to would-be borrowers in advance of housing selection.

Are you hoping one day soon to purchase a big white Victorian house on the far side of your current community? At the same time, are you hoping to leave the life insurance industry and go into the car insurance field?

Then ask your local lender how such a switch could have an impact on your prospects for obtaining a home loan. The answer could shape your timetable--assuming your career change is a voluntary one.

--No. 2: Select a lender for your actual purchase who is flexible in interpreting the rules.

Suppose you’ve already made the switch from life insurance to car insurance sales. And suppose you’ve already put a contract on the big white Victorian house you want to finance. Now is the time to cautiously set about locating a lender who will be sympathetic to your situation.

Many mortgage companies now offer “pre-approval” programs to tell you whether you qualify for one of their loans. This is an excellent way to get an early sense of whether the job change you’ve already made will disqualify you in the eyes of one lender before it’s too late to move on to another.

--No. 3: Be honest about the facts of your career past and present.

Both ethics and practicality dictate that you come clean with your lender about your job history and present employment status. If you’ve been unemployed in the recent past, it’s far better that the lender hear this from you rather than discover the fact from another source.

By the same token, it would be foolhardy not to disclose that you’ve already accepted a new job and will be making the switch during the mortgage application period. The reality is that your lender will probably find this out anyway.

--No. 4: Don’t disclose career plans that have yet to unfold.

A mortgage applicant is under no obligation to reveal future career intentions. Doing so could undermine his chances of getting a mortgage, says Lenz of Countrywide Funding.

“Mortgage lending is based on your situation today and in the past--not on the future,” Lenz pointed out.

Even so, if you blurt out your intentions to switch careers in the near future, the lender is obligated to take these disclosures into account.

--No. 5: Make sure you’re comfortable that your career and housing plans are financially compatible.

It’s one thing to convince a lender that you’re a good risk to take on a mortgage obligation. It’s another thing to know--in your soul--that you won’t be at risk of default.

Are you planning to leave your government job and go into the consulting business after you’ve bought the big white Victorian?

Then you’d better give serious thought to how you’ll meet your mortgage payments in the early--and usually lean--years of your entrepreneurial life, said Davey of Draper & Kramer.

“If you’re the lender, the loan is just a statistic. But if you’re the borrower, it’s your life,” Davey said.

Distributed by Universal Press Syndicate.