Being able to verify a borrower’s employment is a critical aspect of the mortgage lending process. Mortgage lenders are required to obtain an outside party verification of employment even if you provided recent pay stubs. Furthermore, if you are self-employed you can expect your mortgage lender to request some form of documentation verifying that your business is active.
For borrowers who are employed full-time, there are two different types of employment verifications; verbal and written. A verbal verification of employment is typically less invasive and much easier to obtain.. A written verification of employment will break down your pay structure and go into other details such as your expectancy to remain on the job. Typically, written verifications of employment are needed when using overtime, commission, bonus, or other types of income.
Underwriting will reach out to your company on a publically listed business phone number to complete a Verbal Verification of Employment.
If your company uses a 3rd party service (such as the Work Number) there is often a fee charged which will be passed along to you at closing. Third-party services can sometimes be less detailed than what underwriting needs in order to include income like overtime, commission, bonus, etc.. If you have had multiple jobs in the past few years, it is possible the lender will need to verify your employment with your previous employer as well.
For self-employed individuals, there are numerous different types of documentation that can be provided to evidence your business is currently active. If you work in a field where you are required to have a business license or certification, oftentimes proof that your license is active is the easiest way to satisfy this (CPA, Lawyer, etc). If your business does not require a professional license, then recent invoices or a letter from a trade organization are some examples of supporting documentation that can be used.
Overall, be ready to complete a verification of employment at some point in the loan process. Occasionally there could be a recertification of employment just before closing so make sure you do not quit your job before closing!
If you have any questions, please feel free to reach out to discuss with one of our Mortgage Loan Originators at (760) 930-0569.
