What is a letter of employment primarily used for in the context of mortgages?

A letter of employment serves a crucial role in the mortgage process, particularly for verifying income for salaried individuals. This document is typically provided by an employer and outlines the employee's position, duration of employment, and most importantly, their salary or hourly wage. Lenders request this information to assess the borrower's ability to repay the loan. By confirming the borrower's income, lenders can make informed decisions regarding loan approval and the amount they are willing to lend.

In the context of mortgages, demonstrating property ownership, reporting credit history, and outlining loan terms are separate aspects of the mortgage process that serve different purposes. For instance, property ownership is usually proven through title documents, credit history is assessed through credit reports, and loan terms are detailed in the mortgage agreement itself. Each of these components is important, but the primary role of the letter of employment specifically focuses on verifying the borrower's income, which is integral for determining their financial capability to service the mortgage.