Why Do Lenders Have To Verify My Employment, And How Do They Contact My Employer?
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Getting a mortgage can be frustrating, especially with all the work that goes on behind the scenes. Most of that work is done by an underwriter who reviews and verifies the mounds of information you have to supply your lender to get a loan.
This process of underwriting is complicated because the underwriter has to follow the guidelines of the specific mortgage company, the state, the federal government and the specific investor who is guaranteeing the loan (Fannie Mae, Freddie Mac, the Department of Veterans Affairs, etc.).
What Is Verification of Employment?
One step in the underwriting process is the verification of employment (VOE). The mortgage lender needs to check that you are and have been employed to ensure they’re taking into consideration all of your income sources. This confirms that the borrower can cover their down payment and any closing costs.
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Do Lenders Verify Employment On Closing Day?
This process varies from lender to lender. Here at Rocket MortgageⓇ, we usually verify your employment with your employer either over the phone or through a written request. Then, about 10 days before your scheduled closing, it’s not uncommon to re-verify your employment. This is done to make sure nothing has changed with your employment status.
Why Do I Need A Verification Of Employment?
This double verification often confuses clients because it seems like redundant work that is slowing down their loan process. But we’re checking your employment early on to make sure you qualify for a loan before you’ve invested a lot of time in the process. We then recertify your employment right before closing to make sure nothing’s changed.
We’re required to recheck your employment because a change in jobs can affect your ability to make your monthly mortgage payment. This is why we always encourage clients to avoid changing jobs or doing things like getting a new credit card or auto loan while applying for a mortgage.
How Does A Lender Verify Employment?
Another reason we’ve found clients get frustrated with the VOE process is because it’s not always as simple as calling the employer and checking a box. To meet government and investor regulations, mortgage lenders have to call your employer on a phone number that can be verified by a third party, such as Google.
This third-party verification requirement can present difficulties when we’re working with clients employed by small companies that may not have a website, or nonprofits.
Involving the client in the verification process is a conflict of interest. We always have to be able to independently verify the number and then talk to an employer. We also have to verify the employment without any involvement from the client. We can’t call your work number, for example, and have you hand the phone to your boss.
How Long Does Employment Verification Take?
Employment verification is done during the underwriting process, which typically takes anywhere from a few days to a few weeks before your loan is cleared to close. This timeline can depend on multiple factors, including whether you’re borrowing for a conventional loan versus an FHA or VA loan.
The Bottom Line
Verification of employment is an important part of the mortgage process. Your lender confirming your employment status will move you down the path to have your home loan approved and get the house of your dreams. Ready to move forward with the home buying process? Read more about how to prepare for closing and what to expect.