Mortgage Loan

Verification Of Employment Before Closing Mortgage

1. Verification Of Employment Before Closing Mortgage Guidelines

* Days of stated income and no income verification are long over to qualify for a mortgage.

– Borrowers can have prior bad credit
– If they have documented income, they can qualify for a mortgage loan
– If home buyers have great credit but no documented income, they will not qualify for a home loan
– Documented income is the most important factor in qualifying for a mortgage
– Lenders want to be assured borrowers have the right amount of income
– This is so they are able to afford new proposed monthly housing payment which is referred to as PITI
– Lenders want to make sure new homeowners can afford minimum debt obligations without stress
– Mortgage underwriters also need to be assured that the income is likely to continue for the next three years or more
– Job stability is key
– Verification of Employment will be done not just with current employer but also with past employers as well to document they have a two-year employment history

2. Unemployed Greater Than Six Or More Months

* If the borrower has been unemployed for six or more months:

– found a new full-time job
– the borrower needs to be on his or her new full-time job for at least six months in order to qualify for a residential mortgage loan

3. Giving Notice To Your Employer That You Are Quitting Will Affect The Verification Of Employment

* Home buyers planning on buying a home and give notice to an employer they are quitting job, this can present a major issue and may not qualify for a mortgage loan.

– There are many instances where an employee gives an extended prior notice to his or her employer
– They often give notice they are quitting in good faith
– The employee does this so the employer has ample time to find a replacement
– Unfortunately, this good faith effort on the part of the employee will kill his or her chances of getting a mortgage
– When a mortgage lender requests a written verification of employment from the borrower’s employer, one of the questions that are asked is whether the employee’s likelihood of employment will continue for the next three years
– If the employee turned in his or her resignation that they will be resigning and/or retiring in 3 to 6 months or later, then the Human Resources Manager will be honest

HR representative completing the written verification of employment will notify the employee’s likelihood of continued employment is not likely. This is because the employee already has turned in his or her notice or retiring and/or resigning.

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1 comment

  1. Do they ask if employee is Laid off or its just a normal check I am laid off due to covid 19 but still employed


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