What Is Mortgage Employment Verification and How Does It Work?

by Kwee Huset 12/01/2019

Applying for a mortgage is a big step towards homeownership and financial independence. If it’s your first time buying a home, you might be curious (and a little intimidated) about all of the things that go into your mortgage application.

When reviewing your application, mortgage lenders are trying to determine how risky it is to lend you money. If all goes well, and they determine that lending to you would be a worthy investment, you’ll get approved for a mortgage.

There are three main things that lenders will use when weighing your application (however, there are other factors as well).

First, they’ll run a detailed credit report. This will tell them how much other debt you have, what kind of accounts you have open, how long you’ve had this debt, and how responsible you are when it comes to making your monthly payments in time.

Second, they’ll consider how much money you’ll be using toward a down payment. A larger down payment alleviates some of the risk associated with lending to you. Therefore, people with little or no down payment saved can have a difficult time getting approved for a mortgage. And, if they do get approved, they’ll have to pay monthly private mortgage insurance on top of their regular mortgage payments.

Finally, the third main consideration will be your current income. Lenders will look at your previous two years of income (including tax returns) and will seek out current income verification from your employer.

The latter is a key part of getting approved, as lenders will want to ensure that you are in a stable financial situation and will be able to immediately start making mortgage payments.

Today’s post will center around income verification and how mortgage lenders will use your income to determine your borrowing eligibility.

How Do I Verify My Employment?

If you’re employed with a company, most lenders will reach out to your employer directly to verify your employment. You’ll be asked to sign a form that authorizes your employer to share these details with the lender, and then your part of the job is done and you can move on to the next step of your application.

Things get trickier when you’re a freelancer, are self-employed, or work with several clients as a contract worker. In these situations, lenders will typically require you to file a Form 4506-T with the IRS. This form allows your lender to obtain your tax returns directly from the IRS.

Can I submit additional information to verify my income?

There are some situations where providing additional income information can bolster your case in terms of getting approved for a mortgage.

If you own a business, your lender of choice may ask for a profit and loss statement. If you’re an independent contractor or freelancer, your clients who have paid you at least $600 or services or $10 in royalties will be required to send you a Form 1099-MISC.

If you have mixed income, such as a full-time job with freelance work on the side, showing these 1099-MISC forms can help increase your income on paper so that lenders will approve you or a higher mortgage amount or lower interest rate.

About the Author
Author

Kwee Huset

Chinese Speaking Florida Agent About Kwee she is a multilingual full service real estate agent, REALTOR®. A Cantonese, Mandarin, Chinese speaking Florida Agent in Venice since 2000. Living in Venice Florida since 1991, Kwee Huset is a multilingual. English, Cantonese, Mandarin, Chinese speaking Florida Agent in Venice since 2000 helping others to find their dream homes. The Reasons Kwee Huset is the Florida Agent for You! 1. Working with you and for you. 2. I have been named a 5 Star – Best in Client Satisfaction Agent. 3. Always has your interest in mind so you have someone on your side. 4. Kwee know the neighborhoods, market conditions, zoning regulations, schools and the local economy. 5. Your Property will have the exposure of 53 dynamic websites 24 hours a day. 6. Pays for all marketing and advertising costs. 7. I will guide you through the process and ease stress during your buying and/or selling of property. 8. I am a full time resident of Venice for over 25 years, and own home and investment properties locally. 9. I am a full time Florida Real Estate Licensee for over 15 years with experience in successfully selling homes and investment properties. 10. Gives an unbiased, realistic view of home and your options. Unlike buyers and sellers, Kwee has no emotional attachment to property. 11. I Love Venice, it is a wonderful place to live – many FREE things to do. Kwee has been helping buyers and sellers locally, as well as from other states and countries in all walks of life. I have been easing stress and making attitudes more relaxed during the process of buying and selling properties while meeting needs for over 15 years. I have extensive experience, knowledge and a proven track record that will work with your best interest at heart while maintaining the utmost level of confidentiality in meeting your needs and trust in this fast changing real estate market. I help to educate homeowners by showing them the options; e.g. loan modification, special forbearance, repayment plan, short sale, etc. to save their homes from foreclosure and maintain good credit. Check out my testimonial, it is self-explanatory about my services of which there is no substitute and helped me to achieve the 2010, 2013, 2014 FIVE STAR Best in Client Satisfaction Award (Kwee Huset Realty), Century 21 Quality Service Awards and Century 21 Centurion Awards in the Top 100 among all the agents in Southern Region of Florida from Tampa, Orlando, Daytona Beach all the way to Key West (while I work at Century 21 C & L Real Estate from 2002 – 2005). I can help you with every aspect of buying or selling your home because I’m experienced, because I’m professional . . . and because I care. Kwee Huset Contact Kwee Today! The relationship between a home buyer or seller and their agent is based on trust, shared goals and understanding. I strive to continually improve and to do this I listen and take your needs and wants into consideration. You may contact Kwee at phone/text 941-716-3090. Your personal referrals help local students realize and achieve their dreams as well as provide children and families with Clean Water in 3rd world countries.