Is it OK to change jobs in the middle of a home finance transaction, and do I need to inform my lender?

·         "Rent to Own" is a system inherited from the commercial sector and offers the most benefit to the seller. The only real advantage to the tenant or buyer is the ability to walk away from purchasing the home. In fact nearly 70% of tenants participating in rent to own programs do not exercise their option to purchase. Rent to Own works as follows. You agree to purchase the home on or before a future date at a set price. Instead of a security deposit the prospective tenant will provde a down payment, usually twice the size of the typical security deposit for the same home. This down payment will go towards the future purchase price. During your tenancy a portion of your monthly payment (usually slightly higher than rent for the same home) will go towards the purchase price should you decide to purchase. If you do buy the home, on or before the option date, the payoff is reconciled and you are required to provide the difference - if you do not go through with the purchase on or before the option date, you surrender the initial down payment and all equity bought during tenancy. The owner keeps his home and you have no rights to it. Moreover at this future time, financing options can change dramatically thereby destroying an otherwise plausible exit strategy.

·         Lease with the Option to Buy was developed in the commercial market for people that identified the right property, but need time to ensure they can obtain the proper permits to do what they want to do with the land. If they did get the permits, great, if they did not, they are only out the initial money down and monthly payments, a much smaller loss than surrendering a earnest money deposit or working through a two year escrow.

        If you have significant plans for the property you are looking to purchase, rent to own can make sense, but most use this as a first time homebuyer option as opposed to a standard purchase which is not recommended. The learning curve and changing future plans of a first time home buyer can be a serious pitfall in rent to own situations.

·         I would refer to the purchase contract and included contingencies while seeking the advice of your real estate agent to get the answer to this question. This answer could vary depending on these contingencies. If the contract is contingent of the successful completion of a home inspection for any deficiencies. If the septic tank was a point of the inspection, then you would probably be required to pump it; moreover you as the seller are required to disclose the full condition of your home; you cannot keep any pertinent information about the home a secret from the buyer; so if you were aware that the septic tank needed pumping and did not disclose this to the borrower, it makes the contract voidable. On the other hand, if the borrower was aware of the condition of the tank before they entered contract and they still agreed to terms, you will not be required to have the septic pump cleared because they should have included it in their offer as a contingency.

       On a side note states laws differ, so I would refer to state statute, or have your agent do it - it is their job. Depending on the state, their may be a specific statute referring to waste disposal requiring owner to empty a septic tank when property is transferred. If this was the case I would have expected your agent to go over this detail when taking the listing. If they didn't and this is required of you, I would ask them to pay for the pumping with a credit from their commission back to you at closing to compensate for their mistake.

Agency and sub agency are terms referring to the practice of real estate. Both brokers and salespersons are required to follow the same laws and code of ethics, bound by a fiduciary responsibility to their clients... fiduciary being the higherst level of trust the law recognizes. This is referred to as agency. As an agent I am required to represent you to the fullest extent without prejudice, just like a lawyer serving his client. This means representing all apsects of the transaction and not withholding any information that could effect your decision. When you sign a listing agreement you are hiring an agent, or when a broker makes an offer on your behalf they are acting as your agent.

Sub agency is referring to this second situation. With the advent of the MLS Multiple Listing Service, it is common for one agent to make on offer on a home represented by another agent. This is sub agency. When sub agency occurs the listing and selling (buyers) agent split the commission. Sub agency is very common, and should be accepted as such. Without sub agency you would be participating in dual agency, which occurs when both the seller and buyer are represented by the same real estate agent. Although allowed and not illegal, both parties in this situation are required to sign a disclosure stating dual agency is occuring and that they are okay with it. If you are not okay with dual agency because of an inhernant conflict of interest (how can one person represent two people with different goals and honor their fiduciary responsibility), you are allowed to find a different agent to represent you, thereby defaulting into a sub agency agreement.

When dealing with licensing, make sure you ask for a copy of their license, then check it against the issuing institution for any complaints filed by past companies. Just becuase someone is licensed does not mean you should give them your business. You are hiring someone, make sure you do your research - consider this part of a background check. In addition I recommend getting past references.

·         A mortgage is a written instrument that creates a lien upon real estate as security or collateral for the repayment of a specified debt. An instrument is a written legal document created to define the rights and liabilities of the parties involved.  A mortgage differs from a deed of trust, because there are only two parties involved in a mortgage. A deed of trust is also an instrument however it includes a third party (known as a trustee) in which legal title of the real estate is vested to secure the repayment of the loan.  Despite this difference a mortgage and deed of trust are considered similiar instruments, both designed to meet the same demand. Depending on which state you reside in usually determines which type of instrument is used when securing financing.

·         Whether or not you must include your Home Equity Line of Credit in your refinance is going to be up to your new lender and the lender servicing the HELOC currently. In order to keep you HELOC without refinancing it inside the new loan, you need to subordinate it. Subordination must be approved by the new lender and accepted by the old, if either of the lenders say "no" you will be required to pay off the HELOC in a refinance.  Even with the subordination however your CLTV (Combined Loan To Value) is going to be in the 95-100% range, and you need a new lender that is willing to finance with the CLTV between 95 and 100%, because the new lender is going to look at the new refinanced loan and the debt of your current HELOC to qualify.  CLTV restrictions vary between states and counties so you need to discuss your options with someone familiar to your states lending environment. A broker in this situation is probably your best bet because of the options they have over direct lenders.

        In this unpredictable market (2/12/2009), this is by no means a simple transaction, whether or not you will be able to refinance will be determined by guidelines particular to your area. There is no doubt, guidelines have been and are still tightening, so if you are serious about refinancing, you should begin the process sooner rather than later.

      Assuming preapproval, you will be required (depending on the approval's guidelines) to provide supplemental paperwork that will substantiate the claims you have made on the application (W2s, or 1099s, bank statements, verficiation of rent or mortgage, etc...). With a completed application a compentent finance agent can have a preapproval within an hour.

      It is very important to represent your personal situation on the application accurately. For example if you make 4400 in income a month, do not round up to 4500 simply because it is easier to say, sounds better, or is a "clean" number. Doing so can result in preapproval only to find out later your loan has been denied. If you are forced to estimate, underestimate your income and assets, and overestimate your liabilities so there are no unpleasant surpirses.

        In conclusion, some sales require you to get preapproved from a specific lender. This does not mean you must use the lender they are requiring preapproval through. Moreover, it is illegal for someone to require you to use a particular lender. If you run into this situation, you may have to get preapproved from their lender, but feel free to move forward with the lender of your choice especially if the terms are better. For this reason, in volatile markets where guidelines and conditions are in constant change, it is recommended to use a broker. A well established broker will have a significant number of channels available to them allowing them to place your loan with the lender offering the best pricing while fulfilling any preapproval requirements from a particular lender.

Is it OK to change jobs in the middle of a home finance transaction, and do I need to inform my lender?

It is okay to switch jobs, although not recommended when it can be avoided, and you do have to inform the lender of the new job. When getting a new job the lender is going to want to see that it is in the same line of work, because this helps ensure that your position will continue, and that you have experience in job industry chosen.  You will want to tell your lender because if you don't you will have knowingly omitted pertinant information on the loan application, and that is mortgage fraud. Moreover a typical condition before funding is verification of employment. This is an internal condition that banks fulfill on their own. They call your employer and ask if you still have your job, confirm a couple of points and then sign off on the condition. If your employment has changed and they call your old job, and they say you are no longer working for them - your loan will immediately be denied.  Informing the lender of the job change will result in additional conditions, but this is far better than a denial. Defintiely inform the lender of your job change, and do it sooner rather than later.  With that said, you currently have an offer out on a home, which you need financing for to purchase, and you do not have a job. Right now, you cannot get financing, and you will not be able to get financing until you have a job. The preapproval letter used to put the offer in is no longer valid (because of your job loss), consequently you are no longer preapproved. In my professional opinion, you need to cancel your offer until you get the job squared away. If they accept your offer, you are in contract, and currently you have no way of fulfilling your obligations in that contract because you cannot get financing. Do not put yourself in that situation. I would remove the offer (for the time being) focus on getting a new job in the same line of work, and once you have it, resubmit the offer on this home (if it is still available) or find a different house.