A:

Mortgage lenders usually verify your employment by contacting your employer directly and by reviewing recent income documentation. The borrower must sign a form authorizing an employer to release employment and/or income information to a prospective lender. At that point, the lender typically calls your current employer to obtain the necessary information, such as income, position title and length of employment with the company. The lender may also inquire about the likelihood of your employment to continue. Also, while lenders usually only verify the borrower's current employment situation, they may want to confirm previous employment details. This practice is normal for borrowers who have not been at their current company for at least two years.

In general, lenders verbally verify the information borrowers provide on the Uniform Residential Loan Application, but they may opt to confirm the data via fax, email or a combination of all three methods. Lenders use this information to calculate several metrics to determine the likelihood of a borrower repaying a loan on time and in full. A change in employment status from the time the loan application was filled out to when it is reviewed could have a significant impact on whether the borrower's application gets approved.

Employment Verification if Self-Employed

Many people who take out mortgages are self-employed. In this situation, lenders often require an Internal Revenue Service (IRS) Form 4506-T. This form is a request for "Transcript of Tax Return" and allows the lender to receive a copy of the borrower's tax returns directly from the IRS. In a self-employed situation, the lender may need to contact your Certified Public Accountant (CPA) to confirm the viability and strength of your business.

RELATED FAQS
  1. How do mortgage lenders check and verify bank statements?

    Find out how mortgage companies verify your bank statements for mortgage approval. The lender sends a form to your bank requesting ... Read Answer >>
  2. What’s the Difference Between a Mortgage Lender and a Mortgage Servicer?

    Buying a home is an exciting and confusing process. Once the loan is secured, it's important to know who gets the payment: ... Read Answer >>
  3. What is the 1003 mortgage application form?

    Learn about the 1003 mortgage application form, what information it requires and why this form is the industry standard for ... Read Answer >>
  4. What is the key to finding your ideal mortgage?

    Learn what steps you need to take in order to locate the perfect mortgage for your budget, lifestyle and long-term financial ... Read Answer >>
Related Articles
  1. Personal Finance

    What Are Mortgage Lenders Allowed To Ask Borrowers?

    Seemingly intrusive or irrelevant questions are actually legal for lenders to ask of mortgage applicants.
  2. Personal Finance

    Self Employed? 5 Steps to Scoring a Mortgage

    Convince lenders that you're a good bet despite your lack of a steady income.
  3. Personal Finance

    Looking for The Best Mortgage Rate? Follow These 6 Steps

    A step-by-step guide to finding and locking in the best rate for a mortgage.
  4. Personal Finance

    5 New Barriers to Getting a Mortgage

    New lending requirements have made it much tougher to get approved, and some common situations that may not have presented a problem for approval in the past, do now.
  5. Personal Finance

    5 Things You Need to Be Pre-Approved For a Mortgage

    Before you can get serious about buying a home, you need to get pre-approval for a mortgage. Learn what you need to speed up the approval process.
  6. Personal Finance

    What Does a Lender Do?

    A lender provides funds to another with the expectation those funds will be repaid with interest.
  7. Personal Finance

    5 Steps To Qualify For A Mortgage If You're Self-Employed

    Qualifying for a mortgage is a little more complicated for borrowers who are self-employed.
  8. Personal Finance

    Tips for Choosing the Best Online Mortgage Lender

    Finding the right online mortgage lender can be a tall task. Here's some help on how to avoid wasting your time.
  9. Personal Finance

    Mortgage Pre-Approval: Understanding the Process

    Understand the mortgage pre-approval process and why getting a pre-approved mortgage is important for would-be homeowners. Also learn how to be approved.
  10. Personal Finance

    How Many Mortgage Lenders Should You Apply to?

    Applying to multiple mortgage lenders can get you a better deal, but it comes with a few drawbacks.
RELATED TERMS
  1. Lender

    Someone who makes funds available to another with the expectation ...
  2. Mortgage Broker

    An intermediary who brings mortgage borrowers and mortgage lenders ...
  3. Borrowing Base

    The amount of money a lender will loan to a company based on ...
  4. Qualified Mortgage

    A mortgage in which the lender has analyzed the borrower's ability ...
  5. Good Faith Estimate

    An estimate of the fees due at closing for a mortgage loan that ...
  6. Temporary Lender

    A mortgage lender that sells the loans it originates into the ...
Trading Center