Mortgage underwriting – Invisible yet indispensable for loan


Mortgage loans have got quite a few aspects involved and amongst them all there’s the concern of getting approval as well. In this process of mortgage approval, one of the most important roles happens to be played by a person who you’ll never really meet. This person is an underwriter. You should know that no lender would fund or close a loan without the prior approval of a mortgage underwriter. This obviously proves how things wouldn’t really move without a mortgage underwriter also known as a mortgage undertaker. As for the specific function the mortgage underwriter serves, then sometimes he or she’s required to run a check over the figures involved, ensure that all paperwork is in order and then give the necessary approval. If not this, then the underwriter is definitely required to look over all the paperwork and then come to a decision. This of course would be based on his or her experience as well as good judgment.

The various requirements for mortgage loan approval

Remember, mortgage loan approval happens to be one of those things that’s known  to rest on several things. These include your income, credit history, savings, debt ratio and so many others. Essentially the buyer should be able to prove that he or she can actually afford the payments for the mortgage approval concerned. The buyer needs to have a good enough credit history as well that shows a complete record of the repaying obligations being taken care of and fiscal responsibility fulfilled. He or she should also have a verifiable and stable job history. Most importantly, the buyer should be able to show that the money used for down payment is completely his or her own and not borrowed from anyone else.

The importance and role of the mortgage underwriter

Now the role of the mortgage underwriter essentially includes his or her ensuring all these factors actually meet certain guidelines, rather specific loan guidelines. Underwriters ensure that the title, insurance, tax as well as closing documentation are all in place. They’re also known to review appraisals to ensure they’re absolutely accurate and thorough. This is essential for it proves that the home in concern is actually worth the purchase price at least. You  can say that the mortgage underwriter has got final approval as well as final responsibility of the loan. As for the denial coming from the underwriter, then quite often it can be appealed to the head underwriter or  any other superior for the approval all over again. However, for this facts must be in place to support. This is obviously necessary for the overturn of any underwriter’s decision.

There’s also the scope of automated underwriting

It’s also a fact that now automated underwriting is very much in place. In other words, these are automated systems in place. These systems are designed with computer programs into which data is fed. This is handy when it comes to assessing the risks as it’s done with the aid of a formula. It then gives an approval or maybe a denial. Moreover, this system requires rather strict adherence to the guidelines and is generally not known to entertain any deviations or gray areas for that matter.

The commonly prevalent manual underwriting

There are of course quite a few instances wherein manual underwriting is absolutely indispensable. In fact the manually underwritten Federal Housing Administration (FHA) files are pretty common. This is obvious for the FHA actually makes allowances for no credit history and even troubled credit buyers. Plus this enables more flexible debt rules.

From the above discussion it’s clear that an underwriter has a lot on his mind and is required to take calculated risks when it comes to determining how far a file caters to specific loan program guidelines and more.

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Categories : Home Buying

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January 2018
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