Relocation Mortgage
If you’re considering relocating to another state, obtaining a mortgage might initially seem challenging. Nevertheless, a relocation loan, also known as a relocation mortgage or RELO, shares similarities with other types of mortgages. Fortunately, securing a mortgage during a job transition or a move to a different state can be a straightforward process with proper understanding and planning.
The Refined RELO team is your trusted partner for relocations across the continental United States. Wherever your destination, our expert team is here to ensure a smooth and stress-free move for you.
What is a relocation loan?
A relocation loan provides you with the means to purchase a home in a different state when you’re moving due to a new job opportunity. When applying for a mortgage and relocating across state lines, the lender’s primary focus is on your ability to repay the loan. Qualifying for a mortgage in a new state closely mirrors the process in your current state, but there are some extra factors to consider during relocation. It’s crucial to ensure the stability of your income, either through an offer letter from your employer or written verification affirming your capacity to work remotely. This additional documentation plays a key role in the qualification process for a mortgage in your new state.
How does a relocation loan work?
If your new job requires you to move, you will have to solidify living arrangements before you relocate. If you already have an offer letter and start date, you can proceed with the purchase of your home.
If not, you’ll need to rent in the new location for at least 30 days and provide lenders with your first pay stub since it is the least stressful situation. Extended-stay hotels are popular options while you familiarize yourself with the local real estate market and surrounding community.
Alternatively, you may try buying and closing on a property in the new location before you give notice to your current job to ensure a smooth, one-time move. If you are moving quickly, understand that a purchase takes anywhere from 30 to 45 days on average, to close. Your employment will be verified when you apply for the loan and then again just before closing, so ensure that you maintain employment until the sale closes.
Why apply for a relocation loan?
Seeking a relocation loan or a relocation package can prove advantageous under specific circumstances. Some employers offer this type of mortgage to assist their employees in managing the expenses related to relocating for a new job. Without such support, individuals would typically bear the responsibility of covering the costs associated with moving to a new state for their new employment opportunity.
Here are some reasons why someone might apply for a relocation loan:
What are the qualifications for a relocation loan?
Qualification for a relocation loan can be more stringent compared to conforming loans.
However, here are some general factors that typically apply to those seeking a relocation loan:
High Credit Score– A credit score of 700 or higher is typically a minimum requirement
Income & Employment- You’ll need to demonstrate a stable and substantial income to qualify for a relocation loan. Specifically, have a new job lined up with an offer letter and a start date. If this is not possible you will need 30 days of paystubs with your employer before you can close.
Down Payment- Relocation loans require the same down payment as conventional loans. The exact percentage depends on your qualifications, it’s not uncommon to see down payments as low as 3% for first time buyers and 5% if you have owned a home before.
Reserve Requirements– Liquid cash reserves are required after down payment, often expressed as the number of months’ worth of mortgage payments you should have saved.
Debt-to-Income (DTI) Ratio- Your DTI ratio needs to be at 48% or lower to ensure that your monthly debt obligations, including your mortgage payment, don’t exceed a certain percentage of your income.
At Refined Relocation, our dedicated staff is committed to simplifying your journey. Whether you’re navigating mortgage options or seeking guidance on temporary accommodations, we’re here to provide seamless assistance. Trust us to guide you through every step, ensuring a smooth and stress-free transition to your new chapter.
Relocation loans, favored for their widespread availability and manageable down payment requirements, are the preferred mortgage choice for those moving to a new state due to a job change. Prospective buyers should grasp the loan terms and costs to make informed decisions aligning with their financial circumstances and homeownership objectives. To assess eligibility, consult with our mortgage advisors to initiate the exploration of available options.
