Mortgage underwriters: The role of a mortgage underwriter in the home buying process
The underwriter has final approval and responsibility for the loan. Learn more about this role and what an underwriter looks for when he/she reviews your application.
Once you’ve applied for a loan and worked with your mortgage banker and processor to make sure they have the documents needed to complete the approval, that’s when the underwriter comes into play.
An underwriter will review your loan application and will either approve, suspend or deny your mortgage application by looking at your:
• Income — Salary/hourly wages, part-time or second job income, commission or bonuses, alimony or child support, retirement or social security, rental income. *
• Debt — Loans, leases and credit cards. *
• Credit history
• Savings — Checking/savings, gifts, sales of assets, IRA, 401K, Keogh & SEP, sale of previous home.
• Debt to income ratio — Percentage of your gross monthly income that goes towards paying debts (including housing).
*Income and debt could include other sources. Alimony and child support income is only reviewed if the borrower wishes to disclose as a source of qualifying income.
By looking at these factors, the underwriter is able to assess risk for both the borrower and the lender.
Michael, a mortgage underwriter, explains: “My role is important because it helps to make sure that you can afford the mortgage that you’re applying for, and that way, you’re not over-straining your family and your bills, and…you don’t run the risk of any kind of foreclosure or late payments”.
He wraps up his role in the process by saying: “We need to make sure that you stay in the house of your dreams”.
MICHAEL: My role is to pretty much assess the risk for both the client and the bank. So, once you apply for the loan and you go through the process of speaking with your mortgage banker and your processor, then all that documentation is going to come to me, and I’m going to analyze your credit history, your income history, all your banking accounts and then based off of all that, we’re going to be able to decide if we’re going to give you a loan.
MICHAEL: Everyone has a different background as far as their employment. You may be self-employed, you may have just graduated from college and have started your first job – so everyone is going to be different, everyone is going to have different tax returns.
MICHAEL: If I’m looking at your tax returns and I see that there might be something that wasn’t included on the first time, then I would reach out to the processor to reach out to the borrower to make sure that we have that, to get a correct decision on your application.
MICHAEL: My role is important because it helps to make sure that you can afford the mortgage that you’re applying for, and that way, you’re not over-straining your family and your bills, and you don’t run the risk of any kind of foreclosure or late payments.
MICHAEL: As far as from a lending perspective, my job is to make sure that all the mortgages meet government guidelines. So, Fannie Mae, Freddie Mac, Ginnie Mae if it’s a government loan, and they trust me to ensure that there’s an acceptable amount of risk.