What would happen if you’ve been furloughed during a Boston condo purchase?
When mortgage underwriters approve a downtown Boston condo loan application, these underwriters base your loan application on several financial factors, and the most important is your income and your ability to repay the mortgage. Other factors are also included, but lenders focus more on what they perceive as the applicant’s likelihood of being able to make not only mortgage payments but also other related expenses to the condo purchase, such as property taxes, condominium fees and among other expenses. As stated, the most important factor is the ability to repay the loan and you being able to hold on to their jobs. To this effect, underwriters will review the work history of every applicant and conduct employment verification at various times during the loan process, including just before closing.
But what would happen if you were told by your employer you’re going to be furloughed, or worse you lost your job, Should there be a sudden loss of household income prior to closing, the following may happen;
Depending on the banks pipeline, the bank may decide to call off the closing and archive the application. This is more likely to happen with refinancing than with purchase of Boston condo, but if the bank is very busy, like with the COVID-19 outbreak, chances are the manager of the loan application may think canceling the process is the best option. Keep in mind the recent coronavirus outbreak has swamped banks, so they may review your application at a later date.
If the loan file was cleared for closing with just one prospective borrower, another household member who is an income earner could be added. Keep in mind that income sources don’t always have to come from jobs. They can also come from retirement accounts, annuities, trusts, and periodic royalty payments.
If you’re purchasing a condo in downtown Boston and you lose your job through termination or layoff, you must notify your agent, bank and/or loan officer immediately. In many purchase loan situations, the mortgage and Boston real estate brokers will be interested in saving the deal because they expect commission payments. One way to save the loan would be to convince underwriters to look at other application factors that can justify closing even if you haven’t spent 30 days at your new job or you’ve been temporarily furloughed due to the coronavirus outbreak.
With the uncertainty of the job market due to the coronavirus, it would be risky to assume you won’t be out of work (or furloughed) before the closing date. For this reason, you should ask your Boston real estate broker to include a protective clause in the purchase contract to ensure you can recover any earnest money deposits should the closing be called off, and make sure to ask how long it would take to recover these funds so you can plan your personal finances accordingly.
If you’re buying a Boston high rise condo, one of the smartest choices you can make is to work with experienced downtown Boston real estate agents with comprehensive knowledge about financing issues and buying a Beacon Hill or Seaport condo. Here at Ford Realty we can find you the Beacon Hill condo of your dreams. Please feel free to contact us today at 617-720-5454 or via email at email@example.com