When evaluating a potential borrower, lenders consider a number of factors. You already expect to produce a good FICO score, proof of income, and a reasonable downpayment, but have you reviewed your resume? A crucial aspect of loan approval is your employment and employment history – your resume.
Your employment history provides lenders some insight into your financial stability and income consistency. They want to ensure that you have a steady source of income that will cover your mortgage as well as household essentials. Typically, this involves pay stubs, W-2 forms, and tax returns. They will also verify employment with your human resource department, including hire date. If you have been in the same job for a while, this strengthens your application by reducing the risk the lender assumes in loaning you the money. Sometimes, the lender will need to look closer and ask for more documentation if your employment history reveals potential issues.
The approval process for self-employed borrowers may be slightly different. Lenders will expect a strong, steady income stream that will be verified with bank statements and tax returns. A company profit and loss statement will also be requested.
Extended, unexplained employment gaps may be a concern for lenders. The key is to explain, and most lenders understand reasonable explanations such as education, caring for a family member, or extended illness.
Recent changes to your career track or industry can be a red flag to lenders. Remember they are looking for consistency. However, as with other issues, having a strong reason for the change and demonstrating financial stability can alleviate these concerns.
Before you send off your loan package, it’s worth giving your resume a quick review. Proactively offer documentation for anything that seems unusual or that may cause questions. Working with your mortgage professional can help you navigate the process and result in a loan approval.