The most important person in the mortgage approval process is the person you will never see or meet. That person is the underwriter. No lender funds or closes on a loan without the approval of an underwriter. Sometimes her job is to simply check over the figures, make sure all paperwork is in order and give her approval.
More than 1 million customers Innovative solutions to purchase or refinance Competitive rates and superior service Get Started During the mortgage underwriting stage, your application moves from the desk of the loan processor to the mortgage underwriter.
However there are steps you can take to improve your overall financial health and increase your chances of being approved. What Is a Mortgage Underwriter?
A mortgage underwriter is responsible for analyzing your risk to determine if the terms of your loan are acceptable. The underwriter will investigate to make sure your application and documentation are truthful and they will double-check you have described your finances accurately.
Mortgage underwriting standards have become more stringent, thanks in large part to new Consumer Financial Protection Bureau requirements enacted in the last few years.
The underwriting process may vary slightly among lenders, who can delegate responsibilities to originators, processors and underwriters differently. Make sure to check with your loan originator for guidance on what information to send to whom.
Do you have the means and resources to pay off your debts? Underwriters assess your available resources by reviewing your employment history, your income, your debts and your asset statements. If you are self-employed, you may be asked to provide much more documentation of your income and work status.
They will also review your savings, checking, kand IRA accounts to ensure you can still pay your mortgage if you lose your job or become ill. Underwriters will pay particular attention to your debt-to-income ratio; they want to make sure you have enough money to fulfill your current financial obligations, as well as take on a new mortgage.
Do you have solid repayment and credit history? Your credit is one of the most important factors in the loan approval process. The underwriter will review your credit score to see how you have handled past bills i.
What is the value and type of property being financed? The mortgage underwriter must make sure the loan amount meets the loan-to-value requirements of the product.
Otherwise, in the case of a default, a lender may not be able to recover the unpaid balance of the loan. In addition, the underwriter will likely review the type of property you are looking to buy.
This is important because different types of properties carry different risks. For example, many lenders consider an investment property a riskier investment; this is because, historically, a borrower is more likely to walk away from an investment property than their primary residence in a difficult financial situation.
Tips for Speeding Up the Underwriting While the underwriter is ultimately responsible for the approval of your loan, there are a few things you can do to reduce your risk and make the process go more smoothly: It is important to protect your credit score during the entire application process, which includes making your payments on time, keeping your current job, staying with your current bank, maintaining low credit card balances and avoiding major purchases e.
Any changes to any of the above can delay your loan process or adversely impact your ability to obtain a loan.
Respond Promptly to Requests for More Information For the purposes of approving or denying your loan, a mortgage underwriter is essentially a real estate and financial investigator. This means they will be reviewing all of your documentation and paperwork in detail and reaching out for more information when something is incomplete.
The important thing is to respond quickly and accurately, which will reduce the length of the underwriting stage and improve your chances of being approved.
Give your employers or other relevant parties advanced notice that they may be contacted to provide information. In addition, keep records of your conversations with your lender so you have a record of what documents were provided and when.
Cooperate with Your Underwriter With your dream home at stake, the underwriting process can seem very intimidating. However, being prepared and filling out your application and supporting documents carefully and accurately will save you precious time—and make your underwriter happy.
A PennyMac Loan Officer will be happy to answer any additional question you may have about the underwriting process.They try to maximize a number of loan files that everyone has to process/underwrite—it's a quantity-over-quality approach.
Smaller lenders and independent mortgage . Underwriting-- This is a process through which financial institutions (such as mortgage lenders) measure the eligibility of potential borrowers.
If you go to Wells Fargo and apply for a home loan, for example, they will conduct a thorough examination of your credit and financial background. The underwriting process involves the lender's underwriter reviewing the file, income docs, the application, verifying your loan officer's work, running your loan through an automated underwriting engine and then issuing a rejection or a conditional approval.
The process begins with the loan application, and from there it goes to loan processing and underwriting. Here we take an in-depth look at the process to give you a better understanding.
First Step: Loan Application. Learn how you can protect your investment and ensure a quick and easy home closing process, including document definitions and what you can do to prepare. Explaining the Loan Process Part 5: The Closing Process. 02/01/ Kristin Demshki.
CLOSING LOAN PROCESS. Explaining the Mortgage Underwriting Process; Part 5 - The Mortgage . Mortgage underwriting takes place after you fill out a loan application and provide supporting documents.
Typically, borrowers deal with a mortgage broker and/or loan officer first. After that initial step, the loan file will move into the underwriting stage.