Why Do Lenders Ask for Your Job Title?

Filed under: Qualifying for a Mortgage Loan

The mortgage application has become a myriad of information and , quite frankly, a nuisance in the eyes of many borrowers.  The information that lenders require, however, tends to make sense when you take a deeper look into the reasoning behind it.

"Jobs" on wooden block and magnifying glass on newspaper backgroundLet’s take your job title for instance.

We all accept the fact that asking for a borrower’s income, debts, and credit history “makes sense” and we expect that to be part of the information we’ll need to hand over to a lender during the loan application process.  But why is your job title a critical source of information?  After all, as long as they know how much you make, what difference is the the title of your job?

Well, there is a lot of information obtained just by your job title.  Things that might surprise you.

Certain professions tend to be more or less risky than others and based upon your job title, a lender will make some basic assumptions about you.

For instance, if you are a teacher, underwriters know they can go to your district website and see exactly what you earn.  They also know that you might be on a 10 or a 12 month pay schedule.

If you are a nurse, statistics show that you are 7% less likely to default on your loan than other professions.

If you are in sales, history says that you have a slightly higher risk of default because of the potential for fluctuating income and lower job stability.  The same holds true if you are a fairly new small business owner or in a position that gets paid primarily by commission.

This one is interesting…  if you are a doctor, even if you earn a higher income, statistics show that you are more likely to pay bills late.  You almost always pay, but your busy schedule means those payments aren’t always on time.

Insurance companies tend to draw many of the same conclusions based on your job title, using it as a predictor of future risk.

If you have questions about this or any other aspect of mortgage lending, feel free to give me a call or shoot me an email.  I’d be happy to provide you with straight-forward answers.

Franklin Loan Center | NMLS 237653
Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act, 4131316
For questions or concerns please email info@franklinlc.com