One of the most difficult tasks when it comes to buying a house is getting through the mortgage application process. Each step leading from application all the way to approval is pivotal in getting into your dream property. Mortgage underwriting, a process of risk assessment in terms of lending for the potential lender, is one such major stage on this journey. Being able to understand mortgage underwriting services can expedite your home financing experience, ultimately helping you get the house-keys faster.
The underwriting services take a lot of factors into consideration, such as income, credit history, debt to income ratio and your overall financial stability. Lenders do this so that they can be secure in the knowledge of lending money to a borrower who will have the capacity to pay back his or her loan.
The Key Steps in Mortgage Underwriting
This starts with a detailed examination of the mortgage application. They verify the information claimed by the borrower such as personal details, work history and income. You can have the best documentable income in the world, but if you have a low credit score it may not be enough for an underwriter to approve your home loan application. Having a high credit score generally means that you have been financially responsible for quite some time and therefore makes it easier to get approved. The underwriter then “proves” (to the bank) that you earn and have assets.
One important thing that underwriting does is to assess the adequate value of the property before it is financed. It is done in the last step by bundling all collected information. The underwriter determines whether the borrower fits in their lender’s guidelines and approve, reject or ask for more information. Upon approval, the borrower will receive a commitment letter detailing borrowing limits as well as interest rates and repayment terms.
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