For many people, moving from the renting stage to the homeowning stage is a big priority. However, if you are facing unemployment, your work status could negatively impact your ability to pass all the checks necessary to get to the buying part of the process. However, there are still some ways that people dealing with unemployment might be able to get the home they want. Here are some tips that can help you buy a house when unemployed.
Get a Helping Hand
Sometimes owning a Condo, small house or mobile home is actually cheaper than paying rent. In this case, buying might be in your financial best interests, but the trick is going to be getting the money up-front. Perhaps you can get a parent or relative to be your banker and loan you the money to buy your house and they will make the terms flexible enough get you through this tough time of unemployment. But for both of your protection, you should have a written contract with the terms of the loan clearly spelled out.
If you are moving into a new home with a roommate, they may have less debt or better credit than you do. In these cases, it may be a good idea to let that person take the lead on things like a mortgage application. Your unemployed status should not be a factor that works against you if it is the partner signing the agreements. But, once again, if you are going to be a co-owner be sure to get the terms of your agreement in writing. No matter how friendly you are at the moment, you don’t want to end up in court in a “he said she said” situation. If you are making payments to your roommate be sure there is a written record of every payment you make and whether it is an ownership or rental situation.
Prove Alternative Income
It may not be possible for everyone, but some aspiring homeowners may be able to show that they have other sources of income. If your spouse has sufficient income to qualify it’s possible that you can proceed with the purchase. Or perhaps, you’ve been investing some money over the years and have developed an income stream from your investments. In other cases, a person may have settlement funds coming in, an inheritance, or Social Security.
Another option for you would be to buy a duplex or multi-family property. In this case, banks will look at this as a business rather than a personal loan. If you can demonstrate that the property will generate enough income to cover the mortgage your personal job status will not be a consideration. And with some sweat equity, you could end up living rent and mortgage-free.
Whatever the case, if you can show that you can still make monthly payments without issue, it will work in your favor.
Check Your Credit Score
Even if a person is unemployed, they can still have a credit score that most lenders would consider good or even excellent. If you don’t have all of the money necessary to purchase the home you want immediately, you will probably look for lending sources that offer mortgages. If you can show them that your credit score is high, and you still have sufficient income even without a job you might be able to convince them to loan you money but it will be more difficult.
Unemployment has its share of scary challenges, but getting a home might make financial sense in some situations if the right deal comes along. With some of the tips above, you may be able to change your living situation for the better sooner than you think. Don’t forget that having a low debt-to-income ratio can also be helpful.
You might also like:
- Evaluate Your Finances to Know You’re Ready to Buy a House
- 5 Mistakes Most First-Time Homebuyers Make
- How to Calculate the Costs of Relocation
- More Mistakes to Avoid When Buying Your First Home
- Purchase Agreements, Disclosures, Deeds, and Other Vital Documents in a Real Estate Sale
Brooke Chaplan is a freelance writer and blogger. She lives and works out of her home in Los Lunas, New Mexico. She loves the outdoors and spends most of her time hiking, biking, and gardening. For more information, contact Brooke via Facebook at facebook.com/brooke.chaplan or Twitter @BrookeChaplan