One of the first things you might want to do when you are ready to buy a house is contact a real estate agent for help finding the perfect home. This is a good step that you will need to take when you make the decision to buy a home, but you will also need to get preapproved for a mortgage loan. Without a loan, you will not be able to buy a house. As you prepare for this, it's important to understand the following three income-related factors and how they may affect your ability to get a loan and the terms of the loan you qualify for.
Consistency And Length Of Time
One factor that worries home lenders is when they see that an applicant has switched jobs too much or too often. Switching jobs is not necessarily a bad thing, if you are doing it as a way to advance in your career, but it can result in problems when you try to get a loan. Lenders prefer seeing consistency with a person's job and income, and they often look into a person's career for the past two years. In other words, your income may look the most favorable if you have had the same job for the last two years or longer.
If you have switched jobs a lot in the last two years, you may want to wait for a while before you begin working with a real estate agent for help finding you a home.
Amount Of Income
The amount of money you make can also affect your ability to get a house; however, your income amount will affect the amount of house you will qualify for even more so. When you begin looking for a home to buy, most real estate agents will ask buyers if they have been preapproved through a lender. This is done to ensure that a buyer is qualified to buy a house, but it is also completed to know what type of budget the buyer has.
The amount you are preapproved for will be based on your income, and this will help the real estate agent find homes that would be within your price range. Without getting preapproved for a certain amount, you may have no idea what boundaries to use when searching for a home.
The Type Of Income
Finally, the type of income you have may also affect your ability to get a home loan. When you apply for a home loan, the lender will typically want to verify that you actually earn the income you are claiming that you earn. The easiest way to do this is with an income verification form that is sent directly to your employer. If you work for a company, proving your income will be very simple. Not only will your employer have to fill out this form, but you can also submit paystubs to prove your income and tax returns to show how much you have made the past few years.
If you are self-employed, you may have a harder time getting a loan, and this is primarily because it is harder to verify the income of a person who is self-employed. Many people who run their own businesses do not take regular paychecks. Instead, they simply withdraw money from the business as it is needed. In order for you to prove your income from self-employment, you may be asked to submit your tax returns for several years as well as bank statements for the past year.
Buying a house is a big event that takes time. Before you begin the process, you should talk to a lender to get preapproved and hire a real estate agent to help you find a home.
