Everything you need to know about Underwriting

Underwriting is the most important step in getting mortgage approval. The reason for that is it determine ultimately whether the loan will get the approval by the investor or not. To avoid disappointments, submit all the documents required by your processor. You can also talk to them regarding your loan and your current financial situation.

Once you already submit the documents for the underwriting, the underwriter will review it to make sure it complies with lending requirements and guidelines.

With that said, it is the underwriter’s responsibility to evaluate the level of risk associated with the loan. It includes reviewing your credit history, debt-to-income ratio, assets, and other ancillary documentation pertinent to the loan.

Most mortgage underwriters focus on the 3 C’s of underwriting. These are capacity, credit, and collateral. What are these?

• Capacity — Do you have the financial resources and means to repay your debts, including the mortgage loan? To answer this question, they will look at your income history and your total debts.

• Credit — Do you have a good history of repaying your debts, as evidenced by your credit reports and scores?

• Collateral — Does the property serve as sufficient collateral for the loan, based on its current market value? The underwriter will use the home appraisal report to determine this.

Source: homebuyinginstitute.com

Some reminders to help ensure that you get a final approval:

• Ideally, do not switch employment during the loan process. If you must change jobs, notify your processor immediately.

• Do not open any new lines of credit or do any excessive shopping. Increased debt will affect your qualifications.

• Do not make any large deposits into your accounts without notifying your processor first.

There you go. You’re good to go if you submit all the documents and follow necessary things for your approval. Once underwriting has completed their review, then your loan processor will notify you of the results.

There you have it. Hope this helps. Get started for free, Apply now!