Is it possible to get a mortgage when between jobs?

[Syonyk]

A year and change ago, my wife & I set out to get a house built in an area we want to move to.  The plan was to work out details, get the house built, and pay for it as a "second house" for a while until the time was right to move out there.  We could use it as a vacation home when visiting family, move stuff out as we took trips, etc.

Well... that's been a disturbingly slow process.  If it can go wrong or get messed up, it has.  Surveyers doing things with property they were told wouldn't fly ("We talked to Planning & Zoning.  Do this."  "So, in case you want to do something different in the future, I did this totally different thing!"  P&Z: "Um... no?"), issues finding a place for the septic system, delays in permits... the works.

Anyway, the short of it is that I was preapproved for a mortgage close to a year ago, and we figured it would take 2-3 months to get everything up (manufactured home).  Pay the mortgage remotely for a while, take some trips out there to work on the property & get it ready, etc.

This not having happened, at this point, I'm pretty much out of time.  It's down to the wire with things that have dragged for months now having to be finished in a matter of weeks, because we had planned our move long ago, wound down our lease, etc.

This means there's a very good chance that the house won't be up when we move, and my employment with my current employer ends at that point in time.  I have another job lined up (paperwork signed & everything), but it's starting a few months after I move so I have time to do the property work that needs to be done (nobody has lived on this property in years and it shows), and generally to enjoy a few months off with my wife & kid.

We've got a place to stay if needed., but I have a several month gap in employment coming up.

So, I may be in the situation of moving to not-yet-a-house, being unemployed for a period of time, and needing to pay for a house.

Our current assets are ~2x the cost of the house, and a bit of fiddling around demonstrates that, while it would be tight, I have enough cash and "rapidly convertible to cash" assets on hand to pay for the house without having to touch 401ks.  Or I can take a 401k loan.

If I understand things properly, "being unemployed" is a hard and fast blocker to signing a mortgage, even with an agreement of future employment signed and more than enough assets to cover the whole house, because I could go to Vegas and blow all that cash overnight and... dunno, not show up to work or something.  It's a bank, they don't have to be reasonable.

Any suggestions?  Anything I'm missing?  Or do I just stand a good chance of having to sell off a lot of stocks and pay cash/capital gains taxes/etc?

//EDIT to add: Zero debt beyond whatever's on our monthly CC statements.  Credit scores in the high 700s or low 800s (depending on the month).

[electriceagle]

Any suggestions?  Anything I'm missing?  Or do I just stand a good chance of having to sell off a lot of stocks and pay cash/capital gains taxes/etc?
/quote]

Current regulations prevent most banks from writing mortgages with a DTI of higher than 45%.

It doesn't matter if you have 10 million dollars in the bank, no other debt and a perfect credit score. If you can't document income of 222% of the monthly payment, you can't get the mortgage.

[Syonyk]

:(  That's kind of what I've been finding as well.

I guess I should hope that either I can get the house finished soon, or that there's a nice spike in the markets when I have to sell almost everything in a month.

[Blazin]

We had an experience being approved for a mortgage in between jobs by providing documentation of start date and salary.   Although, this was several years ago. 

[DebtFreeBy25]

How long do you have to go before you leave your present employer? Is it possible for you to apply under your current info? When verifying your info, the bank will usually only be in contact with HR, so unless your separation date is currently logged in a system, they're likely to only get your position, start date and current salary. Getting approved for a mortgage typically takes a few weeks, so if that fits in your time-frame apply for one now.

[Syonyk]

How long do you have to go before you leave your present employer? Is it possible for you to apply under your current info? When verifying your info, the bank will usually only be in contact with HR, so unless your separation date is currently logged in a system, they're likely to only get your position, start date and current salary. Getting approved for a mortgage typically takes a few weeks, so if that fits in your time-frame apply for one now.

I've done that, but the house isn't done, so I can't actually *sign* the mortgage, and I believe they recheck stuff right as you sign it.

I might be able to gain a few weeks by using my vacation instead of just getting a payout, though.

[Josiecat]

They usually check your bank accounts and verify your employment a few days before closing.

[Cassie]

A few years ago we lost our buyer because he lost his job. Can you hold off on closing until you start your new job?  Or do you need a certain amount of time on the job?

[Syonyk]

They usually check your bank accounts and verify your employment a few days before closing.

I've been told to continue sending bank statements & such up until that point, so, yeah...

A few years ago we lost our buyer because he lost his job. Can you hold off on closing until you start your new job?  Or do you need a certain amount of time on the job?

Not unless I want to camp for about 3 months...

We set the wheels in motion a year ago, confident that things would work with *plenty* of spare time.  We're moving at the end of next month, and this is pretty well set based on the end of our lease & such (also, moving ends my job).  The new job is set to start in ~3 months so I have time to work on the property (and generally take a break to do physical work because I miss doing that) - the property needs a lot of work to be what we want.

So... the plan if we need another few weeks in terms of "a place to crash" is the inlaws place up the hill, and my backup plan for buying the house is "sell a lot of stuff and pay cash," but that basically drains 90% of our easily liquid stuff (I don't want to mess with 401k loans and the like).

[Syonyk]

Update, for anyone who finds this later:

No.  It's pretty much not possible.

You may be able to get a mortgage within 60 days of starting a new job, but not further out.  If you're taking 3 months off, and want the house closed on before you move, you pay cash.

[FreeAsADragon]

Thanks for the update, good to know.

[Syonyk]

Thanks for the update, good to know.

*sigh*  Yeah.  Advice: Don't do this thing I'm doing.

My current project looks like "buying a house with a blend of cash on hand, selling investments, taking out personal loans at ~9%, and putting what we can on low APR credit cards."  I got handed a nice 0% APR card today, though... (sort of literally - had applied for a personal loan, they wouldn't give me quite what I wanted, so they tossed in a $25k limit 0% APR card as well).

I think the term for that around here would be "sub-optimal for FIRE."

The bank helpfully offered that they could give us a cash-out refinance in a few months so "we could get the cash back," but I don't think we're going to bother with that.  We'll just rebuild stuff from income.  Part of that, which I've noticed is not considered a valid reason around here, is that my wife & I are both more comfortable without debt.  Even a mortgage.  We were planning to pay it off inside 5 years anyway on a 30 year fixed at 4%, because we value our mental stress levels more than a bit extra in the bank.

[flyhyr]

Make sure you are talking to the right lenders.  Without consistent income, you don't fit the profile for national banks.  Remember, as long as you have assets, someone will loan you money.  You just need to know where to look.   Using the property and new house for collateral, you will want to talk to local banks, credit unions, or hard money lenders.  You can structure a construction loan where the payments are made directly to contractors at specified times.  That way the bank is confident that you won't take the money and run and they have an appreciating asset as collateral at the end of the deal.  These loans are often higher interest rates and you can refi out of them to a standard mortgage once the house is finished and you have seasoned income.      Alternatively, you can approach your financial institutions for a loan on your investments.  Depending on what you own and the type of account, you can apply for a loan of xx% on the assets.   401k loans are different as you actually withdraw the money from the account and you need to put it back within 60 days of leaving your job.  This probably wont' work as you are leaving your job soon. 

It looks like you have a backup plan already with credit cards, but I wouldn't discount your other options.  Call at least 5 lenders to get an idea of rates and qualifying factors in your area.

EDIT: Clarified 60 day rule on 401(k) loan

[RedBaron3]

I relocated, switched companies, and bought a house all at once.  Underwriting was OK with my offer letter and a letter from my new employer on proof of employment, but wouldn't allow closing until I had received a paycheck. 

[Syonyk]

So, most lenders get as far as "manufactured home" and politely tell me they can't help.  Very few places will lend for a manufactured home.

Make sure you are talking to the right lenders.  Without consistent income, you don't fit the profile for national banks.  Remember, as long as you have assets, someone will loan you money.  You just need to know where to look.

To be fair, I don't know where to look.  My knowledge of the mortgage process had been, "Talk to a few local banks and prepare for cramps as you sign about three feet worth of stack, with someone who won't let you read the pages you're signing."

If I have assets, though, I don't need a loan.  This is where I seem to fall off the rails compared to a lot of people here.

Using the property and new house for collateral, you will want to talk to local banks, credit unions, or hard money lenders.

Problem: The house is 500 mile from where I live, because we're moving out there.  So by the time I live out there, ideally I'm living in the house. :)

It looks like you have a backup plan already with credit cards, but I wouldn't discount your other options.  Call at least 5 lenders to get an idea of rates and qualifying factors in your area.

It's mostly cash & investments.

But between "manufactured home" and "quitting job," I'm a stupidly high risk case, on paper.

I relocated, switched companies, and bought a house all at once.  Underwriting was OK with my offer letter and a letter from my new employer on proof of employment, but wouldn't allow closing until I had received a paycheck.

The bank offered that, perhaps, they could close on the loan in mid-May once it was closer to my employment start date, but this misses the fact that we'd like to live in the house before then. :)

[Laura03]

Canada’s big banks now place a lot of importance on the credit score and income than they used to before approving a mortgage or loan. If you are turned down for a mortgage by the banks, you can still qualify for a mortgage from a non-traditional lender. You’ll just need to be prepared to show them why they should give you a mortgage.

[Syonyk]

Well, that was a long dead thread bump.