Many borrowers in California end up paying mortgage loan origination fees when buying or refinancing…
One of the requirements for obtaining a mortgage is to prove that you are employed (or self-employed), and moreover, that you have been the past two years at a minimum.
You do not need to be in one job that entire time, nor even at a single company. But you do need to be on what could be considered a stable career track. Lenders will take the time to verify this before giving you a loan to sign.
So, for example:
- Maybe you have been at a single company for the past couple of years, but have changed positions within the company. That is fine.
- Perhaps you have performed the same job role at two different companies over the past couple of years. That is also okay.
- Maybe you have switched industries, but are still in the same approximate job role. That is acceptable.
- You might have changed job roles and even companies within the same industry. But if the progression of your career seems stable and logical, that should be fine as well.
How Lenders Verify Employment
So, how do lenders verify your employment status? There are several methods for accomplishing this goal. It’s usually done through the use of income-related documents, as explained below.
It all starts with verifying your income. The mortgage lender might require any of the following documents for verification purposes:
- W-2 forms
- Tax returns
- Pay stubs
- Bank statements
- Proof of income letter
Usually, if you are self-employed or own your own business, you will only need to furnish the bank statements and the tax returns. The W-2 forms and pay stubs are associated with the traditional full documentation process for regular employees applying for a mortgage.
Based on the information contained in these forms as well as any other information which you offer, the lender will make a determination about (1) whether your income is adequate for loan approval, and (2) whether you are steadily employed. Both of these factors can impact the approval process.
Calling to Ask Your Employer
At some point, the lender is going to want verification which goes beyond paperwork and your word. That means getting in touch with your employer.
Usually, this involves placing a phone call. Before that happens, the lender will give you a form to sign. By doing so, you will be permitting your employer to share information with your lender regarding your employment.
Once you have signed the form, the lender will reach out to the employer. The lender will then ask questions regarding how long you have been with the company, how long you are likely to remain, and so forth.
If you switched jobs at some point during the past two years, there is a chance you will be signing multiple forms and the lender will call not just your current employer, but your past employer too.
Sometimes, the phone call(s) will be all that is needed to complete the employment verification. But other times, the lender may ask for an email or fax from an employer to verify employment in writing.
As to when this all takes place, usually, it is one of the last steps in the process, and takes place a couple of days before closing.
The reason that lenders wait so long to call employers is in case you leave the job you are in sometime during the application process.
How Hard Is It To Verify Employment When Applying for a Loan?
On the whole, employment verification should be easy. After you provide the initial paperwork (i.e. the W-2 or bank statements) and sign the appropriate information release forms for your employer(s) and the IRS, the lender takes care of the rest.
You might hit snags if you go through a big box lender that doesn’t have experience with self-employment or other non-traditional situations with income.
To navigate around that problem, you can go with a local mortgage company that is able to process loans for customers who are traditionally employed orreceive income through self-employment or investments.
Apply Quickly and Successfully for a Mortgage in California Now
At Bridgepoint Funding, we offer both the traditional full documentation loan process and the stated income loan process.
We streamline the application process, keeping the paperwork required to verify your employment and income minimal on your end. That way, applying for a home loan is fast and easy.
To get started now, please give us a call at (925) 478-8630. During your consultation, we can talk about your employment history and what we will need to verify it so that we can qualify you successfully for a mortgage in the Bay Area or elsewhere in CA.