So, you want to get a new home and you have a new job and you are not sure if you can be approved? It seems to be happening more and more. I continue to hear things like “I just moved and took a filler job until I can find something better….. it is a commission job but before I had a salary.”
NO, NO, NO. It just seems crazy to me that people quit their jobs or move in the middle of a home buying frenzy without asking anyone about the rules. Today I had a to help a couple get qualified and it is going to be tough. She still has the same job – she works remotely and has for several years. He used to be paid W2 and now has an hourly job with tips. This is going to be a problem.
When you qualify people for a mortgage – there is a two-year history of employment that is verified at the beginning of the transaction and again at the end the day before closing and funding. The w2 job is no safer to me than the 1099 job but to the lenders it is! To the lenders, a w2 employee has a more permanent position although we all know you can be fired at any time. That whole tips and commission has to be proved for two years. Most people don’t know this, so they consider it ok. They might even make more with this new payment set up. I mean you take a job to make money and if you can work and get tips that the IRS doesn’t necessarily know about and you don’t have to declare – it’s better, right?
NOPE! Not at all. The way a person gets paid and their job security and what HR says about it and how they fill out your verifications are everything. I had another client that lived here in Texas and then his job moved him and his family to Canada for two years. During that time away, he had sold his home and they were being put up in housing in Canada. So, when they were offered to move back to Texas – it was going to be easy……. Until we found out that half of his salary was paid in US dollars and the rest was in Canadian money. So what? Well – it was a mess because we had to source that money and their forms are different – different in every way. Yes, they were in English but still not in the US Dollars that we use and need.
I had another client that received money from her divorce, took it and invested it in her home country where she made much more in interest and yet could not use it because she had it in another currency and we were not accepting money from that country.
The latest issue is cryptocurrency. Yes, it looks hip and cool to say you have it but verifying that it is yours when all there is to show is a 26-digit number is going to be tough. So that is going to be first on the to do list tomorrow – asking underwriting how they want me to prove all that.
Money laundering sounds bad and evil, but I am here to tell you not all of it is. What we are seeing is that with everyone here in the US handling money so many ways and our world seeming to be connected – our money is not, and it is causing problems for the lending industry.
So now when an agent calls me to talk to a new client – my first question is where is the money at now? What form is it in? and how can we prove that?
Agents and lenders – our jobs are getting harder every year!
This article is an overview for a general educational purpose only. The information presented should not be relied upon without the advice of counsel.
Debbie Bloyd is a contributing author to Weekly Real Estate News. She can be contacted at 469-768-0337 or [email protected]
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