When you apply for a mortgage, underwriters will comb through your finances to determine if you’re a good candidate for a loan.
This includes verifying a lot of personal information, including your income, assets, credit history, and employment.
Without these important details, it would be impossible for the lender to assess your default risk, or chances of missing a mortgage payment, or worse, being foreclosed upon.
This is known as “capacity,” which is one of the three C’s of underwriting and basically your ability to repay the loan.
A Written Verification of Employment (WVOE) is a form to be completed by a borrower’s current employer to verify specific details about their employment, such as dates of hire, compensation structure (salary, bonus, commissions), and year to date earnings.
Lenders must obtain a verbal verification of employment (verbal VOE) for each borrower using employment or self-employment income to qualify. The verbal VOE must be obtained within 10 business days prior to the note date for employment income, and within 120 calendar days prior to the note date for self-employment income. The verbal VOE requirement is intended to help lenders mitigate risk by confirming, as late in the process as possible, that the borrower remains employed as originally disclosed on the loan application. A change in the borrower’s employment status could have a significant impact on that borrower’s capacity to repay the mortgage loan and must be fully reevaluated.
When You Apply for a Mortgage You’ll Provide Employment Information
During the initial stages of the home loan process, you’ll simply input or tell the bank or broker what you do for a living, how much you make, and how long you’ve done it.
As a rule of thumb, mortgage lenders generally want a minimum of two years in the same position or line of work.
This shows them a history of earnings, that you have consistently been employed, and have the ability to maintain employment, all of which are important to ensure timely mortgage payments are made in the future.
Once your home loan application arrives at the underwriter’s desk, they’ll dig into the details a bit more and connect all the dots.
This means looking at what you do for a living, how much you’re paid, how much you’ve saved, and ensuring it all makes sense.
Back in the early 2000s when stated income loans were all the rage, underwriters had to be really diligent to make sure what the borrower said they earned made sense.
For example, someone working as a cashier probably couldn’t state that they were making $100,000 and get away with it.
But for those who had a less clear position, sometimes verifying employment could clear things up.
You have more alternatives today than ever before to qualify for a mortgage. Understanding your choices is one of the best reasons to work with a qualified, experienced Independent Mortgage Broker, who is a mortgage professional. They can use new tools to get your income verified and qualify you for a mortgage quickly.
If you’ve heard that you need to fill out a WVOE if you get bonuses, earn tips, or have commission income, this is one great reason to work with an independent mortgage broker. While some lenders may still require this document and written verification, an independent mortgage broker who’s up to speed on paper-free documents and verifications can help you with Day 1 Certainty and other ways to cut down on paperwork that’s often redundant to help you get the mortgage you need to buy the home you want.
Not always. You’ve got several alternatives to a WVOE. First, if your employer participates in a few of the industry wide e-verification programs for income and employment, they will likely have their HR database linked to one of these programs which allows Mortgage Brokers and Lenders to directly verify your income and employment with your signed consent.
Applying for a mortgage can be overwhelming with all the requests, forms, and procedures. Add in some terms like WVOE — Written Verification of Employment — and it could be even more confusing. We decided to clear a bit of this information up for you. You don’t always need a WVOE to get a home loan. WVOE is another term for Fannie Mae’s Form 1005, a standard form that has been given out for years to verify employment status and income when qualifying borrowers for mortgages.
Do I Have to Get My Employer to Complete a WVOE to Get a Home Mortgage?
How long are WVOE good for?
What is the purpose of a VOE?
What does VVOE stand for?
What is a full written VOE?