When applying for a home loan, one of the pieces of documentation your lender needs from you is verification of employment. Your lender is combing through your finances to make sure you’re a good candidate for a home loan and your employment is a big part in determining that. But what is verification of employment and why is it necessary?
What is Verification of Employment?
Verification of employment (VOE)
During the initial stages of applying for a loan, you’ll simply tell your lender what you do, how much you make and how long you’ve done it. Generally, lenders like to see that you’ve been in the same position or line of work for at least 2 years. This gives them confidence that your reported income will stay consistent for the life of the loan. Once your loan application arrives to the underwriter, they will dig in deeper. They will connect the dots and confirm that how much you’ve paid and how much you’ve saved all makes sense. Additionally, if you have an unclear job, verifying employment can help clear up any confusion.
Why is verifying employment necessary?
The biggest reason verifying employment is necessary is because underwriters need to know you’re actually employed with a solid job. If you tend to hop jobs frequently, this doesn’t give the underwriter much confidence that you can successfully pay a mortgage every month. Underwriters will also reach out to your current employer to make sure you’ve actually been employed at that location for as long as you’ve stated. Your employer will also be asked to fill out a verification of employment form that confirms salary, position, and job history. It differs from lender to lender if they require a written VOE or a verbal VOE.
Bottom line, make sure you’re employed through the entire loan process
It’s important that you stay employed for the length of the loan process as a second VOE will be performed at the closing of the loan. This is to make sure that nothing has changed since the first VOE. Believe it or not, there are many cases of applicants moving jobs, getting fired, quitting, etc. before they close on their loan. If you are extremely unhappy at a position, it’s best to wait until after you’ve closed on your loan to make a move. Simply moving jobs can severally delay or even terminate the closing of the loan. If there is no way you can stay in your position, consult your lender on the best steps to take moving forward.
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