Home Loan Questions: I’m on Maternity Leave
Soon-to-be-mothers always look forward to having their baby. Pregnancy is an exciting time for some, and many families decide to move into bigger homes before the baby arrives. Well, both buying a home and having a baby are two of life’s greatest dreams for many people.
Unfortunately, soon-to-be and new mothers may have to postpone buying a house for some time. That is because mothers on maternity leave may have a hard time qualifying for a mortgage. The same goes for fathers on paternity leave, and this is all because of numerous factors that involve having a new baby.
Why Does a Maternity Leave Matter When You’re Applying for a Mortgage?
When you apply for a mortgage, lenders generally look at two essential factors before determining your approval. First, how likely are you to pay your loan as agreed, and second, do you have the ability to pay? The former is measured through your credit score, also called your creditworthiness. On the other hand, the latter is measured through your income and job status, also called your capacity to pay.
If your credit score is excellent and you have an income that can sufficiently pay for the loan, then that’s good news! But, there’s a catch. Lenders won’t take your word as is, so they’ll be doing a background check on you before approving your home loan. So, if you lied about your salary and where you work, that will pose a problem. In addition, your employment status should be verified by your employer. Hence a maternity leave will most likely be disclosed.
Following the background check, mortgage lenders must verify that your shared information is accurate. In addition, they must confirm that the income that qualifies you for a loan is stable and likely to continue. In the case of having maternity leave, your employer can ensure in writing that you will be able to resume your previous position at the end of your maternity leave.
Under these circumstances, if your employer backs you up, the lender is more likely to approve your loan. Moreover, some lenders may require mothers to provide a documented return date. Once your leave is finished, they may also require proof of your return to work by directing a paycheck document.
How to Make the Mortgage Process Easier
As you’re applying for a home loan while on maternity leave, there are several things you can do to ensure that the process goes smoothly:
Compare mortgage lenders.
Don’t just park your car in one place; shop around when you can. Compare mortgage rates and get multiple quotes to weigh your options. Several lenders are willing to work with borrowers in exceptional cases, such as those on maternity leave. In addition, you should have already confirmed how much you can afford to pay before committing to a loan amount.
Work with a mortgage broker.
An alternative to applying for a loan with a bank or a mortgage lender is to check out mortgage brokers that shop for loans on your behalf.
If you are about to go on maternity leave, have a lender verify on paper that they are willing to work with your employment status. If the lender refuses, you can always look for a new one.
Being on maternity leave should not be a hindrance to having your dream home. There are lenders out there that are willing to work with you as long as you can confirm that you can pay for your loan. So find a good one and get the home you want today!
At EST Home Mortgage, we can help you and your family get the best mortgage possible! We are a full-service independent mortgage broker in Michigan, servicing Kalamazoo and nearby areas. Experience a smooth and stress-free mortgage loan with the lowest rates. Call us today and see what we offer!
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