Money Matters
beetee123
member
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
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Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Salary change and mortgage
SO and I are currently saving up to buy a house. We are planning on renewing our lease for one more year, so we would like to be able to buy by August 2015. SO has been working for the same company for about three years although he was promoted about one year ago to a higher position. I have been self employed for a few years, and in September I am expecting a huge salary jump as I will be transitioning from working part time to full time. I am probably looking at making five or six times the amount that I'm making now. My question is if we go to get approved for a mortgage next summer I know that they are going to want to see my taxes for a few years, and they will see that over the year I've jumped to making a lot more. Will this be a problem for getting a loan, or since it will have been almost a year at that point will it be okay?
Re: Salary change and mortgage
I would think you will be ok. People change jobs & get higher salaries. I wouldn't be surprised if they asked you about it & then you can tell them that you went from Part time to Full time and then it will make sense for them.
IF you are still self employed, you may need to meet higher lending standards - I recommend talking with a local lender to get advice on what they require. Talking if free, take advantage and arm yourself with information.
Make sure you have 20% down, closing costs, start up costs, repair/renovation costs/decorating/furniture/appliances, outdoor items, tools, etc --AND still have a good emergency fund in place after all of that.
Eliminate consumer debt if possible or keep it to a very minimum possible. A low debt/income ratio will help/
You do not mention marriage plans, but I am not a proponent of buying with a partner to whom you are not married. Finance by yourself or Finance with SO alone (and pay him rent) - makes for a much easier situation should things not work out romantically.
I probably said it wrong then because I do have a mortgage.
Having worked as a loan officer, I can tell you that mortgages for self-employed people are reviewed much more stringently by underwriters than people who are employed with "traditional employers." You will have to provide more information and more paper work. I would prepare to get those documents ready. Also, some mortgage lenders will not lend to self-employed people unless they have been fully self employed for at least a few years.
I am in favor of budgeting a home cost on one income only (in this case, your SO's). This way if the other income falls through, or someone decides to be a stay-at-home parent, you have that flexibility. Or, the 2nd income all goes toward savings only. This is what my DH and I did. We bought our home based only on his income. Before kids, any income I earned went into savings. His income paid the expenses.