Approved for mortgage but spouse just got furloughed

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720pete
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Joined: Fri Aug 03, 2012 8:11 am
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Approved for mortgage but spouse just got furloughed

Post by 720pete »

Hello, prior to COVID-19 my spouse and I purchased a home with a closing date in May. Three weeks ago we uploaded all our financial documents to our mortgage lender Chase and the application went to underwriting. The underwriter we are working with told us we had been approved after we uploaded pay stubs, bank statements, tax return request authorization etc. We both have credit scores near 800 and no debt and are putting 33% down. Yesterday spouse got furloughed, meaning no paycheck for 3 months. She is allowed to apply for and collect unemployment during this time.

Upon learning this I emailed the underwriter and asked if anything else was needed from us and if we would need to provide additional proof of income closer to the closing date. Underwriter said no documents needed at this time but did not specifically address whether we would need to provide paystubs requests closer to May. Underwriter said we would be notified if Chase needed anything else.

I am wondering what I should do, if I should tell the underwriter about spouses situation. I can probably get approved for the mortgage on my own income and credit rating but obviously would prefer to just leave things the way they are if it means not having to jump through extra hoops. Will the underwriter see that spouse is applying for unemployment? Do I need to report this change in work status? Thanks!

More details - mortgage is fixed rate. Total cost including insurance and HOA dues will be $1,700 month and I am making $90k annually.
Swivelguy
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Re: Approved for mortgage but spouse just got furloughed

Post by Swivelguy »

It's likely that you've signed (or at least clicked "I agree" to) an agreement to notify the lender in the event of a major change to your financial situation prior to the closing date. You should inform them ASAP so that they can update underwriting accordingly and avoid a delay to your closing. You will still easily qualify for this on just your income, and there are plenty of parties motivated to keep the transaction on the rails.
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whodidntante
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Re: Approved for mortgage but spouse just got furloughed

Post by whodidntante »

If it had happened one day after closing, it would have been none of their business because the deal is done. But I think I would tell someone who planned to give me a quarter-million dollars that material facts have changed. But gamblers are surprisingly honest in my experience.

As you said, you believe you can qualify alone, so it may not even cost you the house. If it doesn't go your way, c'est la vie. There will be another house that will work out.
BillyK
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Re: Approved for mortgage but spouse just got furloughed

Post by BillyK »

I have a buddy who is a mortgage broker, and he told me the other day lenders are now requesting verification of employment as of the day of the closing due to current shaky employment circumstances.
AlphaLess
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Re: Approved for mortgage but spouse just got furloughed

Post by AlphaLess »

In my experience of getting a mortgage quite a few time, I am pretty sure that the employment that was used to verify income needs to be valid up to and until the closing.

If you sign the papers, and next day, you are fired, laid off, furloughed, or just tell your company to get lost, it would not matter.
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.
AD3
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Re: Approved for mortgage but spouse just got furloughed

Post by AD3 »

Swivelguy wrote: Thu Apr 16, 2020 10:27 pm It's likely that you've signed (or at least clicked "I agree" to) an agreement to notify the lender in the event of a major change to your financial situation prior to the closing date. You should inform them ASAP so that they can update underwriting accordingly and avoid a delay to your closing. You will still easily qualify for this on just your income, and there are plenty of parties motivated to keep the transaction on the rails.
This in a nutshell, I just finished a refi and they had us send them the four most recent paystubs. You will also sign a document at closing saying if anything has changed. You need to disclose the change with her employment status.
FunnelCakeBob
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Re: Approved for mortgage but spouse just got furloughed

Post by FunnelCakeBob »

Same advice as those who say you should report this as you've likely agreed to disclose any material change in financial situation as part of your mortgage application. You don't want to withhold this information now and potentially give the creditor an excuse to attempt to foreclose years down the road by claiming application fraud or breach of agreement.

If I'm reading your situation correctly, your wife/co-borrower will not have a paycheck for 3 months but eligible for unemployment pay during those 3 months, and then likely to return to her previous job with the same income. This appears to work in your favor as it's a temporary situation. Creditors have to be cautious in distinguishing between a temporary change in financial status (such as taking a short-term sabbatical or maternity leave) vs a permanent change in creditworthiness. If the creditor reacts by raising rates or fees or imposing unfavorable terms, I would go as far as countering by noting the temporary change of your wife's work status. If her employer provided documentation of the 3-month furlough, be sure to have it ready.

Also be sure to pay your bills as usual so your credit history is not negatively impacted. Good luck and hang in there!
Goal33
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Re: Approved for mortgage but spouse just got furloughed

Post by Goal33 »

Ask the mortgage broker, not the underwriter. They will know what you need to do to get the deal done.
Mrsfrugaln
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Re: Approved for mortgage but spouse just got furloughed

Post by Mrsfrugaln »

I work for a large mortgage wholesale company and yes you need to report this. We are currently verifying employment the day of closing and I'm sure other lenders are doing this too. Before the pandemic, the requirement was to verify employment no more than 10 days prior to closing. So based on a May closing date, they will find out no matter what their current policy is for verifying employment. It's best to be up front. Can you qualify for the payment on just your income alone?
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Nate79
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Re: Approved for mortgage but spouse just got furloughed

Post by Nate79 »

BillyK wrote: Thu Apr 16, 2020 10:53 pm I have a buddy who is a mortgage broker, and he told me the other day lenders are now requesting verification of employment as of the day of the closing due to current shaky employment circumstances.
I am currently doing a refi and the mortgage company has informed us this is a requirement.
Isabelle77
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Re: Approved for mortgage but spouse just got furloughed

Post by Isabelle77 »

We bought a house last summer with Chase and they verified employment the day before closing. It was actually a huge pain because my husband's HR department never called them back and we almost had to delay closing. :oops:
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tarnation
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Re: Approved for mortgage but spouse just got furloughed

Post by tarnation »

We got final approval at AIM, and they delaying until we could provide them with next paystub. And still said we would have to verbally confirm employment and had to sign that we don’t anticipate any reduction in pay and/or aren’t intending to request mortgage payment deferrals.
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