Author Topic: Unemployed and buying a home? No problem!  (Read 4274 times)

Fuzzy Buttons

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Unemployed and buying a home? No problem!
« on: September 23, 2014, 06:42:59 AM »
This isn't a huge one, but I came across this article with the headline "Help! I Lost My Job While I Was Buying a Home".  I figured it would be advice on how to back out of closing on a new home if you suddenly have no more income.  After all, in an emergency situation like that the last thing you want to do is take on more debt.

But no, the article is mostly about how to "salvage the purchase"!  They do make a brief observation that "making those new mortgage payments might be a real challenge" under a section called "Should you Tell Your Lender?"  btw, short answer is "YES".

Still, I was a bit taken aback, and I thought of this forum.

dragoncar

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Re: Unemployed and buying a home? No problem!
« Reply #1 on: September 23, 2014, 11:58:04 AM »
On the other hand, I bet a bunch of us would have no problem making payments after a job loss, and may end up getting a mortgage just before quitting in order to get today's sweet rates with the ease of w2 income

mydogismyheart

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Re: Unemployed and buying a home? No problem!
« Reply #2 on: September 23, 2014, 12:29:57 PM »
This happened to me last year and I am VERY thankful I was able to find a way out of purchasing the home eventually.  I was 2 weeks away from closing on my home when I lost my job.  This was also before I discovered Mr Money Mustache.  I actually went through the full effort of getting my parent's to co-sign which forced me to switch to FHA because I wasn't putting 20% down.  I had virtually no savings and very little in my 401K.  My payments sky rocketed from $1750/mo up to $2300/mo during the process.  I began to freak out but didn't know how to back out of the sale and not lose my $3500 EM check.  I was able to go to my co-signer and get them to drop out and then get my lender to decline my loan and get my $ back.  Holy cow, what a process. I couldn't believe they were going to let me go through with it!!!  I don't recommend it unless MAYBE you are financially stable.  So glad I was able to get out of it.  My situation is much better now.

Fuzzy Buttons

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Re: Unemployed and buying a home? No problem!
« Reply #3 on: September 23, 2014, 02:54:04 PM »
This happened to me last year and I am VERY thankful I was able to find a way out of purchasing the home eventually.  I was 2 weeks away from closing on my home when I lost my job.  This was also before I discovered Mr Money Mustache.  I actually went through the full effort of getting my parent's to co-sign which forced me to switch to FHA because I wasn't putting 20% down.  I had virtually no savings and very little in my 401K.  My payments sky rocketed from $1750/mo up to $2300/mo during the process.  I began to freak out but didn't know how to back out of the sale and not lose my $3500 EM check.  I was able to go to my co-signer and get them to drop out and then get my lender to decline my loan and get my $ back.  Holy cow, what a process. I couldn't believe they were going to let me go through with it!!!  I don't recommend it unless MAYBE you are financially stable.  So glad I was able to get out of it.  My situation is much better now.

Scary story, dog!  Sounds like you were able to sidestep a major money mistake - congrats!

(Also, loving I could call someone "dog" and it would actually be a nickname based on their name.  I promise not to do it again. ;)

ohyonghao

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Re: Unemployed and buying a home? No problem!
« Reply #4 on: September 24, 2014, 02:17:39 PM »
Sometimes I'm amazed at how the lending market works.  I couldn't even get a loan until I was made an out sourced employee rather than a contractor, even with 4 years of contracting with the same company.  Then my broker got us into an FHA loan with 10% down (I know, not quite mustachian, but it eliminated a 30mi commute through traffic that made it 1.5 hours during rush), and we had to go through a few rounds of financial records back and fourth.

If I were to have lost my job sometime during the process, which some coworkers in similar situations did, I would have been scrambling to find ANY loophole I could get out, even forgoing my earnest money would have been better than getting into a place I knew I couldn't afford.  Now we are happily whacking away at the mortgage with plans to refinance to a traditional mortgage and chop 20 years off the loan.

I can understand the mindset a little bit, you've been working hard towards getting this deal, you've dreamed about moving in, how awesome it will be, sometimes it can be hard to let go of the dream, but if you suddenly find you can't afford it then it is in everyone's best interest to bow out gracefully.

mydogismyheart

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Re: Unemployed and buying a home? No problem!
« Reply #5 on: September 24, 2014, 02:30:14 PM »
This happened to me last year and I am VERY thankful I was able to find a way out of purchasing the home eventually.  I was 2 weeks away from closing on my home when I lost my job.  This was also before I discovered Mr Money Mustache.  I actually went through the full effort of getting my parent's to co-sign which forced me to switch to FHA because I wasn't putting 20% down.  I had virtually no savings and very little in my 401K.  My payments sky rocketed from $1750/mo up to $2300/mo during the process.  I began to freak out but didn't know how to back out of the sale and not lose my $3500 EM check.  I was able to go to my co-signer and get them to drop out and then get my lender to decline my loan and get my $ back.  Holy cow, what a process. I couldn't believe they were going to let me go through with it!!!  I don't recommend it unless MAYBE you are financially stable.  So glad I was able to get out of it.  My situation is much better now.

Scary story, dog!  Sounds like you were able to sidestep a major money mistake - congrats!

(Also, loving I could call someone "dog" and it would actually be a nickname based on their name.  I promise not to do it again. ;)

Yes that's OK :) LOL

mydogismyheart

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Re: Unemployed and buying a home? No problem!
« Reply #6 on: September 24, 2014, 02:33:20 PM »
Sometimes I'm amazed at how the lending market works.  I couldn't even get a loan until I was made an out sourced employee rather than a contractor, even with 4 years of contracting with the same company.  Then my broker got us into an FHA loan with 10% down (I know, not quite mustachian, but it eliminated a 30mi commute through traffic that made it 1.5 hours during rush), and we had to go through a few rounds of financial records back and fourth.

If I were to have lost my job sometime during the process, which some coworkers in similar situations did, I would have been scrambling to find ANY loophole I could get out, even forgoing my earnest money would have been better than getting into a place I knew I couldn't afford.  Now we are happily whacking away at the mortgage with plans to refinance to a traditional mortgage and chop 20 years off the loan.

I can understand the mindset a little bit, you've been working hard towards getting this deal, you've dreamed about moving in, how awesome it will be, sometimes it can be hard to let go of the dream, but if you suddenly find you can't afford it then it is in everyone's best interest to bow out gracefully.

Yeah, when it happened to me I felt so trapped, like everyone on the planet was helping me to still get into the home and I couldn't get away from it.  No one was really listening to the fact that it wasn't a good idea and I wanted out.  And in the very beginning, I just went along with it because I didn't think there was any way a lender would approve me with no job and that I'd eventually be able to get out of it and get my EM back.  I didn't think it would actually get as far as it did.  And yes, there is an emotional attachment too, it was something I worked really hard for for almost 7 years and it was suddenly slipping from my grasp.   It was crazy.

Cassie

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Re: Unemployed and buying a home? No problem!
« Reply #7 on: September 24, 2014, 02:41:43 PM »
If the lender finds out they will not give you the loan. This happened to us when we thought we had a home sold.

ohyonghao

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Re: Unemployed and buying a home? No problem!
« Reply #8 on: September 24, 2014, 03:04:54 PM »
Sometimes I'm amazed at how the lending market works.  I couldn't even get a loan until I was made an out sourced employee rather than a contractor, even with 4 years of contracting with the same company.  Then my broker got us into an FHA loan with 10% down (I know, not quite mustachian, but it eliminated a 30mi commute through traffic that made it 1.5 hours during rush), and we had to go through a few rounds of financial records back and fourth.

If I were to have lost my job sometime during the process, which some coworkers in similar situations did, I would have been scrambling to find ANY loophole I could get out, even forgoing my earnest money would have been better than getting into a place I knew I couldn't afford.  Now we are happily whacking away at the mortgage with plans to refinance to a traditional mortgage and chop 20 years off the loan.

I can understand the mindset a little bit, you've been working hard towards getting this deal, you've dreamed about moving in, how awesome it will be, sometimes it can be hard to let go of the dream, but if you suddenly find you can't afford it then it is in everyone's best interest to bow out gracefully.

Yeah, when it happened to me I felt so trapped, like everyone on the planet was helping me to still get into the home and I couldn't get away from it.  No one was really listening to the fact that it wasn't a good idea and I wanted out.  And in the very beginning, I just went along with it because I didn't think there was any way a lender would approve me with no job and that I'd eventually be able to get out of it and get my EM back.  I didn't think it would actually get as far as it did.  And yes, there is an emotional attachment too, it was something I worked really hard for for almost 7 years and it was suddenly slipping from my grasp.   It was crazy.

Ours was down to the minute in buying (our funds were shy $100 for their extra funds calculation), and we had already put in our notice to move out of our apartment.  The stress went away when we resolved to moving to an apartment near my work if need be.  Luckily it didn't come down to that.  Even successfully buying a home can be a huge emotional roller coaster.  You definitely deserve big props for turning away despite all the pressure to move forward.