3 Considerations during the Mortgage Underwriting Process

3 Considerations during the Mortgage Underwriting Process

3 Considerations during the Mortgage Underwriting Process

3 Considerations during the Mortgage Underwriting Process, Buying a home can be stressful, and waiting for your mortgage to be approved can be very stressful. But much of that uneasiness can be attributed to not knowing or understanding what the insurer is looking for during their decision-making process, also known as underwriting.

During this phase, the underwriter reviews the information you’ve submitted to make sure it meets the mortgage lender’s guidelines and criteria for the loan you’re applying for. By checking your documents, the insurer determines if you are a good long-term risk if they give you the loan. In other words, the lender wants to make sure that you eventually repay the loan and make the payments on time.

The top three things, according to PennyMac, that underwriters look at to decide whether or not to get approved for their loan include:

1. Capacity

The insurer wants to know if you have the money to pay your debts. He will see your work history, income, debts, and assets like your bank statements, 401(k) accounts, and IRAs. He/she will carefully review his debt-to-income ratio to make sure he or has enough money to cover his new mortgage, as well as her current obligations.

In addition, the insurer wants to determine if they have enough money available to make a down payment, if necessary. If you don’t have the money for a large down payment, the lender may require you to have private mortgage insurance for conventional loans, not FHA or VA.

2. Credit

The insurer will review your credit report to see how you have handled paying your debt in the past. He will look at the types of credit he has obtained, such as car, student, and other loans, as well as credit cards. In addition, he will determine how much credit he has obtained and what the terms of his previous loans are. Basically, the insurer wants to establish that you can pay the proposed mortgage payments in full and on time-based on your past credit history.

3. Warranty

The insurer will analyze the type of property you want to finance. For example, if the home will be an investment property, it may be determined to be a riskier investment than if you plan to physically live in the home. Often, if the home is an investment property, a borrower may be more likely to abandon it if they run into financial difficulties.

In addition, the insurer will determine the value of the home. He wants to make sure the lender is not lending more money than the value of the property. Therefore, the insurer will order a home appraisal, which assesses the current value of the home.

Once the underwriter has reviewed all of your information, you will be notified of their decision, whether or not you have been approved and for what loan amount.

At Grandview Loans, located in Indianapolis, our mortgage specialists will work with you to find the right home loan program that you may qualify for. Contact us today at 1-886-690-4920 or fill out our online application form.

Leave a Reply

Your email address will not be published.