When you apply for a mortgage, the potential lender will ask for a written verification of employment to establish your ability to repay the loan. Here’s why that document is important.
Meeting lending standards
Lenders are legally required to determine a borrower’s ability to repay the requested loan. Verifying employment status is a major aspect of that. As part of the loan underwriting process, the lender will ask you to obtain a verification of employment letter from your company’s management addressing the following details:
- Your date of hire.
- Your income. If your income is divided between salary and bonuses or commissions, the letter must explain how much each contributes to your total pay.
- Your prospects for continued employment.
Although discussing your prospects for continued employment may be uncomfortable, your manager or someone from your company’s human resources department will provide information on your future with your employer based on the company’s outlook, your performance and what is reasonable for your industry.
What you should do
As soon as your mortgage lender supplies you with the documents needed to qualify for your loan, contact the individual at your company responsible for providing this letter immediately. A delay could hold up your loan.
Related – Prequalified or Preapproved: What’s the Difference?
