Buying in 2022 Complicated Questions

[sccredit]

Happy New Year all. Hoping some experts, or at least some very experienced buyers, can help me with some questions.

I have been self employed for a while now (5 years) and have my tax returns in solid shape to prove income. We were planning on buying locally (SoCal) this year but recently have had a huge wrench thrown into the plans. One of my clients has offered me a crazy amount of money to relocate to the PNW and start a new division. So a few questions that have me utterly confused lol.

1. Going from Self Employed to an employee, will they just use my new employment income for a mortgage?

2. How will income be looked at relocating states?

3. Anyone have a mortgage broker in Wasington State (South Sound area) that they trust?

4. Probably looking at buying something in the $700k range in the South Sound area. Is a 5% Conventional doable? I will be 4 years post CH7 discharge March 12, looking at buying in May/June timeframe.

5. Anything I am missing and should be aware of going into this?

Thanks everyone!

[ShanetheMortgageMan]

If you are trying to close before you begin work then lenders can use an employment contract in order for your new employment to qualify, start date of employment must be within 90 days of your closing date.  The employment contract must clearly identify the employer and you, be signed by the employer, and be accepted and signed by you.  Also must clearly identify the terms of employment, including position, type and rate of pay, and start date as well as be non-contingent (or if conditions of employment exist, the lender must confirm prior to closing that all conditions of employment are satisfied).  Also, in addition to any reserves that are required (which is often none on a 1-unit primary residence purchase) you'll need to show sufficient funds to cover the monthly liabilities, including the new mortgage payment, for the number of months between closing and the employment start date, plus one.  Only your fixed base income will be used to qualify in this situation (extra income like bonuses, commissions, or overtime won't be included).

If you've already started employment at least 30 days prior to closing, then just a paystub should be needed.

The conforming loan limit is $891,250 in Snohomish, King & Piece Counties and would allow you to do 5% down up to a $938,157 sales price.  Lewis, Mason & Thurston Counties have a max conforming loan limit of $647,200 and would allow you to do 5% down up to a $681,263 sales price.  Financing a single loan above those loan limits is considered a jumbo loan and while there are some 5% down options, the rates are more attractive if you put 10% down.  There is also the option of a combo/piggyback loan where you finance 80% of the sales price on a 1st mortgage and get a 2nd mortgage up to 95% of the sales price, avoiding PMI, but your BK within 7 years could be an issue.

[sccredit]

@ShanetheMortgageMan This is incredibly helpful. I would start the position (and payroll) prior to the move since the Company is local so that should help ease the process. Great information on the mortgage options and loan limits, a lot to think about. You do Washington loans? I will have to reach out closer to and get the process started. Thank you for this!

[ShanetheMortgageMan]

You're welcome, and yes on Washington.  Since the new company is local then they'd just need to provide confirmation in writing that you can work remotely, or there is a brick & mortar location up there which you'll be working at, in order for the underwriter to accept purchasing a home in Washington as your primary residence.