The Underwriting Process

Obtaining a mortgage requires more than submitting an application. An intricate process goes on behind the scenes. The process begins with the loan application, and from there it goes to loan processing and underwriting.

The term “underwriting” refers to the process that leads to a final loan approval or denial, which is determined by a professional underwriter.  Underwriting involves the process of lenders verifying your assets in order to approve you for a loan.

The loan program you apply for determines which method the underwriter uses; the government agency or secondary market for your mortgage program or the lender’s guidelines.

Open communication is important here, so make sure that you are available and responsive during this time; plan on checking your email multiple times a day, every single day and making sure you are available to accept phone calls.   If everything goes smoothly, underwriting can be done in as little as three days.

Although the documents required are based on loan type, typically the documents being verified are tax returns, W-2’s, bank statements and pay stubs. Don’t be surprised if the underwriter asks you to explain recent deposits or transactions. You may know where a deposit came from or what transaction was made, but your underwriter does not. This will make their life easier and speed up the process of getting you into your home as quickly as possible.

Once the underwriter has reviewed all the necessary information and documents, he will make a decision on the loan application. There are a few possible outcomes at this point. The loan can be approved outright or the lender may determine that conditions must be fulfilled before the application can be approved. As mentioned earlier, you might be required to provide additional verification of income or conclude the sale of your current property. The loan might be denied if the borrowers do not meet underwriting requirements. If you are denied for a mortgage loan, the lender will send an explanation of the decision.

The more you prepare yourself ahead of time, the better off you will be.  Make the right decisions when you’re about to take out a mortgage by understanding how the underwriting process works.

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