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Daycare Center and Family Home Forum>Income and Employment Verification for a Home Loan?
earlystart 03:11 PM 06-20-2015
Has anyone been in a similar situation and have any information/advice? I've run my home daycare out of this house for 3 years (I rent). But my husband and I want to move and buy our own townhouse. Our current income and credit scores are great, and we're pre-approved for more than enough for what we want to buy. My question is that, is there any problem when closing on a house, when the lender goes to verify your employment/income and realizes that since you're moving, and you run your home daycare out of the current home, your current job is technically ending and you don't yet have your next job secured?

I'm planning on going to work for a preschool center as a preschool teacher (regular W-2 job) instead of opening up a new daycare. And in fact, I want to do this before I buy a new place, so I can ensure I'll be able to afford the mortgage with the new salary. I thought that since it's in the same line of work (and what I did before home daycare, so the same industry for 9 years), it shouldn't really matter. But the mortgage broker I talked to was steering me away from that and just wanted to base my income on the current daycare.

I'm wondering: for anyone who has had a mortgage approved while running their daycare, at what point did they verify your income/employment? And how did they go about doing it? Like, how would they even know if I switched jobs right before closing? How late in the game do they re-check your bank statements and such? I could just say my daycare is still open (I'll still technically be licensed, just won't have any kids enrolled), but really I'll be employed at a preschool center getting my income from there.

Sigh, this is a really specific question/situation, so I can't find any info about it online, and it seems like every regular person is clueless about daycare businesses. Maybe I need to talk to more lenders who seem more knowledgeable. Thing is, I really do need to change jobs asap, because I have kids leaving, and no kids to replace them and I won't be able to pay my bills come mid august.
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NoMoreJuice! 03:21 PM 06-20-2015
https://www.daycare.com/forum/showthread.php?t=75619

Hope this helps! My story is on there, and I did have trouble, but don't panic. Many people have had success.
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kendallina 04:26 PM 06-20-2015
I've read that they will recheck bank statements, etc in the week before closing. I never had a problem when we bought a house with verifying my income, but by switching jobs so late in the loan process, they may question whether you have steady employment. I wonder if that's why your loan person was trying to sway you away from doing that?
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Unregistered 07:11 PM 06-20-2015
Originally Posted by kendallina:
I've read that they will recheck bank statements, etc in the week before closing. I never had a problem when we bought a house with verifying my income, but by switching jobs so late in the loan process, they may question whether you have steady employment. I wonder if that's why your loan person was trying to sway you away from doing that?
I'd try to wait or have it in your husband's name. From what I know of home loans, it's very rare to be approved if you've been at a job for less than two years even if you make a good income at the new job.
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MarinaVanessa 10:20 AM 06-21-2015
The only problem I can see is that you've had a steady job now (your own daycare) for 3 years and you'll then have a change of employer in your history, most lenders are more comfortable with a long-term employment history at the same job and might see a "new job" as a slight concern.

Another issue that might come up is your current income vs the income you'll be earning at your new job. Hopefully you'll be able to earn more than you do now at the new job which would look good on paper. My concern though is that you will actually earn less working at a center.

I don't know what your rates are like for center teachers in your area but in my area center teachers only earn $12-$15/hr maximum for lead teachers and that's if you're lucky and get into a good center. I can easily make more than that doing home daycare and that's including the fact that my own 2 younger kids take up 2 spots which I don't get paid for. If I didn't have my kids I could easily make $50k a year and that's still 2 spots short of max capacity (I can have 8 but don't like to have more than 6 total including my own kids) and working at a center I'd only make $30k a year max, if I was lucky.

Hopefully your preschools pay more than what the preschool center teachers get paid here.
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Malmom 07:50 PM 06-21-2015
I would not change jobs right now if I were you. We are in the process of trying to buy a house and was told that as long as it was the same profession, it didn't matter. My husband had 6 consecutive years at one company, switched and has 2 months at his new one. Same profession. But it doesn't matter, and we were just turned down for a loan because of it. We were told to wait a year and reapply. We are looking for another loan company, but it hasn't been easy.
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