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What is a Written Verification of Employment (WVOE) and why is it so important?
 
Before you qualify for a home loan, mortgage lenders will want to verify how much money you make and ensure that your income is stable before you buy the dream home you’ve been wanting!  
 
A written verification of employment (WVOE) is a typical mortgage requirement whereby the lender requests a form be completed by the borrower's current and/or previous employers to ascertain and verify specific details about their employment such as dates of hire and termination as well as compensation structure (salary, bonus, commissions) and year to date earnings.
  • WVOEs are a requirement and must be completed in order to secure financing
  • If an employer does not return it in a time timely fashion or refuses to complete it, your loan approval could be in jeopardy.
  • We find it best that the borrower prepare their employer for the WVOE request to ensure they realize the importance.
Why does a lender need to verify my income?
It is important to verify your gross income so mortgage lenders can calculate “front-end” and “back-end” debt ratios.
 
The front-end ratio compares your mortgage payments with your gross income, while the back-end ratio takes into consideration all of your monthly loan payments in comparison to your gross income.
 
By calculating these debt ratios, mortgage lenders can determine whether you’ll be able to pay off your mortgage without any likely issues.
 
What are the possible drawbacks of the employment verification process?
As part of the employment verification process, lenders also want to know your personal job outlook. In this case, they may ask your employer to confirm that you’re likely to sustain your position. Many times, it is hard for lenders to get in touch with employers to confirm the necessary details. So, to help the process along, try to communicate as openly as possible with both your mortgage lender and your employer to get the right documentation delivered correctly.
 
When will my mortgage lender do an employment verification?
Typically, lenders will want to verify your employment status long before you close on a home. It’s usually done as part of the loan underwriting process. However, additional WVOE checks are made before closing. If you’ve recently lost your job or appear to be at risk of losing your current job, a bad report could affect the deal.
 
Still have questions? Contact us today.