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When it comes to calculating income, there are some numbers and categories that can bring uncertainty into the total picture. When you review a paystub, you may see 2 – 3 categories of pay; sometimes you can see upwards of 10-12. As a buyer you may understand exactly what you take home each week, month, year. But to someone who doesn’t know your income this can be confusing and take time to dig through. When this occurs, a lender will order a WVOE (written verification of employment) to verify.
So, what does a verification of employment do?
A verification of employment gives the employer a chance to break down the different types of pay for the lender. This can include overtime, bonus, tip, commissions and many other variable or different types of pay. For this reason, a verification of employment is often needed when we have to calculate incomes that include any of the aforementioned types of pay; and also different variable types of pay that aren’t straight salary.
As a buyer or a lender, you should often request these during the pre-approval process whenever applicable. Verifications of employment can make or break a mortgage transaction and they
are the most highly regarded types of verification you can have aside from paystubs.
If you’re really riding your max comfort or budget, I’d recommend getting this done ahead of time!
In other cases, this may be a requirement if the paystubs don’t show year-to-date totals as well! So, when in doubt, get a verification of employment. Any savvy shopper or lender will exercise this option prior to making offers on homes. If you think you won’t be able to get a WVOE easily and you have any variable income, I would recommend gathering your final stubs from the last two years of employment (the final check in December that you received). This will allow the lender to calculate your variable income based on your year-end totals each year.
This subject will apply to any and all types of mortgage loans (for the most part). So, if you have any questions or need any additional information, feel free to contact me at on the contact form!