topic Re: Technically Unemployed?....Loan advice in Mortgage Loans

Technically Unemployed?....Loan advice

jayble — Sun, 16 Feb 2020 04:47:49 GMT

I'd appreciate any mortgage experts thoughts.

So I am recently unemployed after 19 years with the same company. I am getting paid through February 2021 per my employment contract. I have been looking for another job in the same field but have been unable to find one as of yet. (Being 54 is apparently a hinderence)

Looking to relocate to Florida and buy another home. I'm getting ready to put my current home on the market and will use the proceeds towards my new home. I expect from that sale I will have $200,000 for a downpayment. Based on the homes I have been looking at in Florida, that would be about a 40% down payment, so looking to finance $300,000. However, not sure if I can qualify for a loan without being "employed" even though I still have my full income for the next year. Mortgage Fico is 682 (that is the middle score)

Since I am 54, the Rule of 55 allows me to access some of my retirement accounts without the 10% early withdrawal penalty. I have considered pulling money out of one of my accounts to pay for the new house in cash. Not ideal as the withdrawal will be taxed and will push me up into the next tax bracket, but not sure of any options to finance a home with my job situation.

Is there any viable options for me to qualify for a mortgage?

Thanks

Re: Technically Unemployed?....Loan advice

CreditInspired — Sun, 16 Feb 2020 10:39:31 GMT

Hi OP and welcome to myFICO

You are in an excellent position to have a salary for another year. Now, you didnt ask for advice, but I would like to offer some other options, especially since you're 54 without a job offer on the table.

1. Please dont access your retirement account to purchase a home. This is your bread and butter since retirement is only 10 years away.

2. When you sell your home, I suggest splitting your $200K profit into CDs that will reach maturity at different intervals. Example: Get four $50K CDs to mature at 1 year, 2-year, 3-year, 4-year intervals.

3. If you move to FL, rent first to see how you like the area you have chosen and what the job market has to offer for your skillset. And you've already experienced that age, although illegal, can come into play. Renting works in your favor. You won't tie up all of your money if: (1) you don't find a job and/or (2) you don't like the area.

IMHO, since you're a stone's throw away from retirement age, throwing your retirement funds and a huge amount of monies into a home without a job in hand are putting the horse before the cart. I think you should take advantage of the excellent financial position you're in and hold out, and play wait and see.

Now, let me get on course and answer your question. You are correct that it would be difficult to get a mortgage with no job or job offer in hand. One question UWs ask employers is what is the likelihood of applicant's continued employment.

GL2U on whatever you decide to do.

Re: Technically Unemployed?....Loan advice

jayble — Sun, 16 Feb 2020 14:53:54 GMT

It has been a surprise how much age comes into play, although covertly. Inquiries into comfort level with tech, asking where I see myself in ten years, having to much experience. It's been an eye opener for sure. If nothing works out in my current field, there are similar occupations I can move into and while there would be a significant impact on my income, I'd be able to work from home with occasional travel requirements. I think that is why having a house paid off in a place I'd like to retire is so appealing to me .

I agree with your suggestion to rent and make sure I like the area, but as crazy as it sounds, a part of me feels like I'd be just throwing away the money I'd pay for renting.

You've offered sound advice and confirmed my concerns about obtaining a mortgage. Thanks for your input, much appreciated.

Re: Technically Unemployed?....Loan advice

NC_Mtg_Loaner — Tue, 18 Feb 2020 02:59:10 GMT

Find a modest $200-250k fixer upper home and pay cash maybe?

Re: Technically Unemployed?....Loan advice

jayble — Sat, 22 Feb 2020 14:05:37 GMT

If I were to do a cash purchase of a property at say $225000, would I be able to get a HELOC with my job situation? Was thinking about buying something that needed some work but would still need to access $ to do the rehab.

Also, another suggestion was that I do a rollover of my 401k to access funds to purchase house and then get loan against the house to complete the rollover within the 60 days.

Thoughts?

Re: Technically Unemployed?....Loan advice

Revelate — Sat, 22 Feb 2020 14:18:44 GMT

AFAIK if you have equity in the property (you will at 200k down) you can get a HELOC right after you close.

I might actually do that on my refi: lender asked if I was getting rid of it or not, one subordinate financing issue gone if I dump it as a condition of closing.

I like that HELOC though, admittedly I don't see having a need for it soon but I have leveraged it in the past. As it was I only had a year in between mortgage at 25% down, and some appreciation, to get my small HELOC and it almost assuredly could have been done sooner. At some point I will be reopening it for sure even if it is just a fallback financing plan: defense in depth.

Re: Technically Unemployed?....Loan advice

donkort — Sat, 22 Feb 2020 14:21:57 GMT

Wouldn't your present income count? Even though your contract is up, you are still generating income until 2021.

And couldn't you get another job in 2021, thereby continuing the income stream?

Of course, what you and others have mentioned...the fixer-upper, the HELOC--sound swell.

This is based on not knowing many aspects of your situation.

Re: Technically Unemployed?....Loan advice

jayble — Sat, 22 Feb 2020 17:22:43 GMT

I would expect my income to count and yes I will obtain another job in 2021 to keep up that income stream.

The 401k rollover would be my preference. I'm a little nervous about a fixer upper and surprises.

There are any mortgage brokers out there I'd love a PM!

Re: Technically Unemployed?....Loan advice

donkort — Sat, 22 Feb 2020 19:31:18 GMT

I believe---correct me if I'm wrong---that if the electricity is modernized, the plumbing system is good, and there's no termites and no mold---that the risks of a fixer-upper are substantially reduced.

I do know what you mean. I am not a "project" sort of guy. Ideally, I'd want my house to be a new construction.