Mortgage Underwriting Work : What Does it Entail

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A home is a precious property. It takes some people up to thirty years to pay off their mortgage loan and own a home. If you are employed, and have constant income, you can own a home through a home loan as well. The process starts with the submission of a mortgage application form. After your application is received by the lender, you are asked to submit documents that would help the loan officers pre-approve your application. If your application file is pre-approved it is automatically forwarded to the mortgage underwriting department. In this department there are detectives called underwriters.

Their role is to investigate the truth about a loan applicant on behalf of the lender. Without the underwriter’s help, a lender could overlook some issues about a home buyer and regret later. Underwriters are gatekeepers and they will not let you get in unless you are totally creditworthy. The mortgage underwriting experts evaluate your pre-approved file again to detect false information or misleading statements. They cannot approve a file that seems suspicious. Their main focus is your financial information. They want to verify your means of earning income, your sources of the down payment and if you have residue income in the bank. Mortgage underwriting work is very sensitive and difficult.

It entails certain computations such as debt to income ratio. This one seeks to know how much you owe others and whether you can still pay your house loan and your creditors with your income every month. Mortgage underwriting standards are sterner now than they were in the beginning of twenty-first century. Back then there were home buyers who bought home loans without demonstrating their ability to repay them. This explains why many foreclosures were done by banks in the recent past. If you want to buy a dwelling now, you must be ready to face very strict and tough mortgage underwriting principles.

So it will quite difficult to qualify for a house loan now if you cannot afford it. Additionally, if your credit score is very poor, you might miss a chance to buy a property. To ascertain your credit score, a mortgage underwriting team will check your FIC (Fair Isaac Corporation) credit score with the three main credit bureaus: TransUnion, Experian and Equifax. The team looks for red flags on your report. These can include bankruptcy, debt collections, foreclosure and so on. When even a single red flag is noted, the underwriters ask for a letter of explanation. If you give valid answers, they will consider other factors such as the nature of your current and past employment records.

They may also ask you to pay a larger down payment than applicants who have high credit scores. Another important demand from lenders concerns your monthly income and debt obligations. Your debt should not be more than thirty-six percent of your monthly salary. Mortgage underwriting department also reviews a home buyer’s property appraisal. It does this to make sure that the value of the property you want aligns with the mortgage size you want to buy. They seriously consider factors such as the location, natural disaster vulnerability, and other risks.

Mortgage Outsourcing helps many companies cut costs. There are many Contract Mortgage Processor Services that cater to Mortgage Brokers and Lenders nationwide with a structured process to ensure its success.