What’s Written Verification of Employment (WVOE)? Can it Help Us Get the Mortgage and Home We Need?

WRITTEN VERIFICATION OF EMPLOYMENT

Applying for a mortgage can be overwhelming with all the requests, forms, and procedures. Add in some terms like WVOE — Written Verification of Employment — and it could be even more confusing. We decided to clear a bit of this information up for you. You don’t always need a WVOE to get a home loan. WVOE is another term for Fannie Mae’s Form 1005, a standard form that has been given out for years to verify employment status and income when qualifying borrowers for mortgages.

Do I Have to Get My Employer to Complete a WVOE to Get a Home Mortgage?

Not always. You’ve got several alternatives to a WVOE. First, if your employer participates in a few of the industry wide e-verification programs for income and employment, they will likely have their HR database linked to one of these programs which allows Mortgage Brokers and Lenders to directly verify your income and employment with your signed consent.

Second, you could get your employment and income verified on the same day online. This is part of Fannie Mae’s Day 1 Certainty program. The Day 1 Certainty program is intended to speed up the mortgage approval and finance process. It offers freedom from paper-based traditional processes, including WVOE (Written Verification of Employment). Your Independent Mortgage Broker can guide you through this process.

What Are My Alternatives to Verify My Income and Qualify for a Mortgage?

You have more alternatives today than ever before to qualify for a mortgage. Understanding your choices is one of the best reasons to work with a qualified, experienced Independent Mortgage Broker, who is a mortgage professional. They can use new tools to get your income verified and qualify you for a mortgage quickly.

A qualified independent mortgage broker can get your income and assets verified on the same day, all online. This means no more copying last 2 months of pay stubs or trying to use your phone to take a picture of paper documents. You won’t have to take forms in to your employer, and won’t have to spend a fortune copying tax returns or bank statements.

If you’ve heard that you need to fill out a WVOE if you get bonuses, earn tips, or have commission income, this is one great reason to work with an independent mortgage broker. While some lenders may still require this document and written verification, an independent mortgage broker who’s up to speed on paper-free documents and verifications can help you with Day 1 Certainty and other ways to cut down on paperwork that’s often redundant to help you get the mortgage you need to buy the home you want.

Will We Be Able To Buy a Bigger, Better House? Is an Adjustable Rate Mortgage a Smart, Safe Choice?

ADJUSTABLE RATE MORTGAGE

Mortgage interest rates have been declining for a while now, so you may not even think about an adjustable rate mortgage (ARM). There are a few reasons an ARM might make good sense for you financially even with today’s low 30-year fixed mortgage interest rates. ARM interest rates can be up to half a percentage point (or more) lower than a fixed-rate mortgage, especially when it comes to Jumbo ARMs and Super Jumbo ARMs. In high housing cost markets like Los Angeles and Orange County, along with many other high cost counties in the State of California, a half point difference in mortgage interest rate could help you to buy a bigger, better house.

What Are the Advantages of an Adjustable Rate Mortgage (ARM)?

As long as ARMs offer lower interest rates than fixed-rate 30-year mortgages, you may be able to qualify for a larger loan and therefore, a bigger, better house.

For example, if you wanted to buy a $1 million home, put 20% down, and applied for a 5/1 ARM at 3.35% interest, your monthly payments (excluding taxes and insurance) would be about $3,540. At 3.99% interest and a fixed-rate 30-year mortgage, your monthly principal and interest payments would be more than $3,800.

If there is no difference in interest rate between a 30-year fixed rate mortgage and a 5/1 ARM, then the ARM won’t help you to qualify for a higher loan amount and a bigger house.

What Are Some Pitfalls of an ARM?

ARMs come with different terms. Common ARM terms are 3/1, 5/1, 7/1, and even 10/1. The first number indicates the number of years you’ll have your initial interest rate locked-in. So, a 5/1 ARM will have the same interest rate and monthly payment for five years. The second number indicates how often the rate can change after the initial rate period. You’ll notice all the common ARMs can have their interest rate change every year after the initial fixed-rate term. By “change”, you’re right — the biggest pitfall with an ARM is the potential for the interest rate, and monthly payment, to go up every year after the initial fixed-rate term. Watch our short video clip below that explains the 3 Reasons why you should consider an Adjustable Rate Mortgage.

If you’re interested in an ARM so you can buy the home you want, and save on the compounding effect of interest, you should work with an experienced mortgage professional to locate an ARM that has terms you can understand and live with. ARMs can have caps on the amount their interest rate can go up when the fixed-rate term ends. They can also have a cap on the total interest rate increase over the lifetime of the loan.

What is the Best Mortgage Advice You Ever Heard? How Big Should Your Monthly Mortgage Payments Be and More

mortgage broker

Buying a house is one of the biggest financial decisions most people will ever make. We’ve put together a few tips from people who’ve done it successfully.

Get Multiple Quotes from Multiple Lenders Without Multiple Credit Inquiries or Hard Hits to Your Credit

You can improve on your interest rate by having your application shopped across multiple lenders, but not having your credit run multiple times. This is very easy when working with an independent mortgage broker. Since the independent mortgage broker is working on your side. They take your loan application and when the independent mortgage broker runs your credit they can then shop with multiple lenders to get multiple quotes giving you the best options. 

Lenders are aware you’re applying for loans with more than one lender when you’re working with an independent mortgage broker, who submits your loan applications.Since the Independent Mortgage Broker WORKS for the CONSUMER and NOT the LENDER, they have several choices from where they ultimately send the loan to. Since the lenders are getting a lot of business from the independent mortgage broker they are likely to be more diligent in responding to your application. Also, the very lowest mortgage interest rate may not be the very best choice for you. Working with a knowledgeable independent mortgage broker who can apply with multiple lenders will also give you a good idea of which lender is the best communicator and best to work with overall for your unique situation. Since different lenders are better for different borrower situations. 

Such as quick fast closing timelines, streamlined limited paperwork, for situations where time is of the essence. Or other lenders that may provide the rock bottom cut throat discount rates but require a ton of paperwork and letters of explanation and extensive income documentation, those lenders may be a good option if the borrower/consumer is not in any hurry and can afford to delay a closing and is willing to come up with all the needed paperwork. So working with a mortgage broker helps the consumer navigate the sea of lenders and loan product choices out there. If you’re concerned about multiple credit inquiries reducing your credit score, this is also why a mortgage broker is a great option since this reduces multiple inquiries on your credit report. With the single credit report run by a mortgage broker that broker can shop your loan with dozens of lenders, without any additional credit inquiries or hits to your credit report

Lock in Your Home Loan Interest Rate for the Longest-Possible Time Needed

You may not have even heard the word “escrow” before you started looking for a home to buy, but it can last longer than you may think. When you’re applying for a loan, go ahead and lock in the rate for the longest time your lender will allow, depending on the situation. You don’t want to be surprised with a higher interest rate and higher payments at close of escrow should interest rates go up while you are floating. It’s also best to get your Realtor Real Estate Agent introduced to your Independent Mortgage Broker earlier on in the home buying process. When they are both on the same page things run smoothly. You may be able to out negotiate other buyers and get that home you really want, since your Realtor would know from the Mortgage Broker how quick they can close. This would help when writing the purchase offers, since your agent can offer the seller shorter contingency time frames, where your loan can close quick with a shorter escrow, making you stand out above the competition of other home buyers.

Keep Your Mortgage Payment Under or Close to One Paycheck

This is one of the simplest forms of mortgage advice and overall, most reliable. No matter what the future holds, you can plan financially to manage a mortgage payment that equals one paycheck (if you’re paid weekly). If you have a two-income household and are paid twice a month, the same advice holds true.

 

Sign for a Mortgage That Will Let You Save for Retirement

Think about how you will best be able to save and invest your money. If your mortgage payment will allow you to save $1,000 a month and you can invest it at an average rate of 6%, you’ll build up a substantial retirement fund. Even if your home increases in value, chances are you’ll have a more secure retirement if you allocate your money this way.

And finally, get preapproved for a mortgage before you start home shopping. Few things are more frustrating than being uncertain of how much you can offer on a home, and losing the home you really want to a buyer who’s been preapproved and is prepared to make a better offer.