Becoming unemployed while in the middle of your home search certainly brings about some worry. Today, we’re breaking down some of the impacts a loss of job has on your home search.
As always, each situation is unique. Be sure to consult with a financial professional before making any decisions.
Do I have to stop looking?
Unfortunately, if you’re in the middle of home searching or even just made an offer on a home, there’s a good chance you may have to pause now. When you become unemployed (even if you have the financial assistance from the government it’s considered temporary) you’re at a reduced income. This means that the odds of the lenders giving you a loan have lessened. This is assuming you do not another co-signer on the application.
The good news is that as soon as you get another job, you most likely can return to home shopping, meaning there may not be any long-term effects.
What about my credit?
You may also be wondering how this impacts your credit. The financial moves you make after unemployment will determine what happens to your credit. A loss of a job can put you on a tighter budget, especially if you weren’t planning for it. As long as you can afford to pay your important bills on time, like your credit card. And because money is tight, you may find yourself using your credit cards more often. This increases your debt-to-income ratio which has an impact on your credit score. We’ve got a blog post on how to improve your credit score.
Ultimately, do what you can to preserve your cash and try to not take on more debt than you currently have. If you do happen to negatively impact your credit score, the good news is that typically it’s repairable although it will just take some time.
The Wolf Team
As always, it’s important to consult with a financial professional when seeking advice. If you need a recommendation, reach out to us today! You can use our contact form or ring us at 858-722-6847.