Back to work after being pinkslipped, Frank wonders if he can still get a mortgage
The last time we caught up with "Frank" last spring, our tech guy was renting a condo with his wife and scouting Stoneham and other suburbs for a good deal on a home.
Then disaster struck. Frank, like millions of others over the past two years, was handed a pink slip and suddenly found himself thrust into the world of the jobless.
A regular contributor to the comments section on this blog, Frank suddenly dropped from view.
Well I am happy to report that I caught up with Frank and he's back - having landed another IT job last fall.
But he's wondering, given his recent layoff, how long he will have to wait before a bank might consider him for a mortgage.
"I am wondering what a new position will do to our house hunt, when applying for loans etc." Frank writes.
I put that question to Lloyd Hamm, chief administrative officer of Eastern Bank. And his answer, while encouraging for Frank, should be sobering to many others who are just now getting back to work after struggling for months - or more - to make ends meet on the unemployment line.
Fortunately for Frank, he's a relatively easy case. In fact, once he hits the six month mark at his new job, which is just around the corner, he might - might being the operative word here - be able to get a mortgage, Hamm indicated.
No, Frank isn't pulling down a stunning salary. And he doesn't have a brother-in-law working as a loan officer.
But what bankers will look at is how Frank dealt financially with his layoff, Hamm notes. Did he starting missing payments and let his credit rating slide? Were bills piling up, 30, 60 even 90 days overdue? Were there charge offs? Did he have to chew through his savings to keep afloat financially?
The answer to all those questions, in Frank's case, is a resounding no.
Rather, when his job was axed, he had a well-thought out contingency plan. It enabled Frank and his wife to live off of her salary and his unemployment checks.
He kept up with all his bills and, also key, kept his savings intact - including a pot of cash he has stashed way for a future down payment. His credit rating is still in the 700s.
"Going through that, all the planning that we had put in place paid off perfectly," Frank writes. "Not touching savings, able to live off unemployment and wife's salary etc."
Yet even with all that, Frank would probably have to pony up a sizable down payment as well - say $100,000 towards a $300,000 house. Five or 10 percent down won't cut it, Hamm said.
Frank, however, may be more the exception than the rule, Hamm indicated.
For many others who are just getting back to work after losing their jobs in the Great Recession, a longer wait may be in store.
If bills slipped or savings dwindled, it could be a year or two, or longer, before a bank will consider you for a mortgage, Hamm said. And your first order of business has to be getting your financial house in order and rebuilding your credit rating and savings.
And in this still uncertain economy, time back on the job is important - there is always the risk of "reunemployment," Hamm notes.
The recession may be officially over. But for the many who found their dreams and careers sidelined, it is going to take a long time to dig out.
