The Mortgage Underwriting Process

What You Should Know About the Mortgage Underwriting Process Before You Apply

If you’re new to the real estate world, there are a number of terms you are probably unfamiliar with. You may have seen them, but have no idea about their meaning. One word you’ll see a lot if you’re thinking of applying for a mortgage is “underwriting”. It basically means the process of evaluating your loan application. The lending institution is responsible for thoroughly examining your application and documentation and determining if you will be able to meet the payment schedule, and to make sure that the property is worth enough to cover your loan should you default.

Once you’ve submitted all your paperwork, it’s wise to allow up to a month for the approval process. It can take less time, but if we need to verify some of your documentation, it may take a while for someone to respond. For instance we may want to talk to the appraiser about the valuation of the house. The person who wrote the appraisal may be extremely busy and not be able to return the call of fax for several days. If this happens with each source, a lot of time might potentially be lost.

The main points lenders are concerned with during the mortgage underwriting process are:

• Your credit history
• Value of your assets
• Income to debt ratio
• Monthly expenses
• Employment stability

Since they are the ones loaning you money for the mortgage on your home, they want to be sure that they’ll make their money back with interest.

We’ll show you how to find free mortgage calculators on the Internet, if you don’t already know about them. You can use these to get an idea of how much you’ll qualify for and what the monthly payment would be. Because they ask for limited information from you, they won’t be able to give you exact amounts. You can at least get a rough estimate of where you stand before you actually talk to us or another lender.

You should also make sure your credit report is accurate. Sometimes these reports contain information that is wrong, or a complete surprise. Under federal law, each person in the US is entitled to a free copy of their credit report from the three main reporting agencies (Experian, TransUnion, and Equifax) each year. You should review these reports carefully and if anything is inaccurate, request that it’s corrected. This can take several months, so allow enough time in your home buying schedule.

If you take care of everything possible in advance of your application, your mortgage underwriting process should go smoothly and maybe even happen faster. We take pride in our ability to help you through the maze of purchasing real estate.