Underwriting is one the most crucial steps of mortgage processing which can even decide whether your loan gets approved or not. Underwriting refers to the process in which your loan lender will verify all your details which includes identity proofs, assets, income, property details, financial situation, home appraisal, credit history and debts, so that he/ she can give an approval to proceed with your loan application. It is basically a check for assurance from the lender’s side to determine whether you are capable to pay the loan back on time. Before starting with the underwriting process, the mortgage broker usually collects all the documents that are required for the process.
Underwriting process is beneficial for both the lender as well as the applicant. The main duty of the mortgage underwriter is to calculate the risk the lender might face if the loan is approved. Also, the underwriter can ensure that the applicant does not opt for a loan that he/she cannot afford to repay.
Major steps involved in mortgage underwriting process:
1. Pre-Qualification
In this step, the lender will conduct a quick verification of the financial information of the applicant to get to know the details regarding how much mortgage they can likely get approved for.
2. Application
In this step, the applicant is required to submit an application along with the required documents for the underwriting process. A loan officer will guide the applicant in this step.
3. Verification
This is a crucial step in which all the documents provided by the applicant is verified thoroughly by the underwriter. Once the verification is complete, a pre-approval letter will be issued by the lender.
4. Appraisal
A property appraisal provides the lender with assurance that the worth of the house chosen by the applicant is suitable for the mortgage that is applied for.
5. Title Search
Another procedure to confirm the property is free of liens or other financial or legal claims is a title search.
6. Final Underwriting Decision
After complete verification of the documents and application, the underwriter issues a final judgement. The final decision could be approved, denied, approved with conditions or suspended.
The time required to complete the mortgage underwriting process usually varies from one case to another. But usually, mortgage underwriting process duration can range from a couple of days to several weeks. The sooner the documents required for the underwriting process are submitted, the faster the underwriting process will be initiated.
Tips for streamlining the mortgage underwriting process
1. Check Your Credit Report
Verifying your credit report and correcting any wrong information is very important before the underwriting process starts. Your chances of getting a loan approval can increase with a good credit score. Ensure that you have the minimum credit score required to apply for the type of loan you choose. Generally, a score of 620 or above might help for easier loan approval.
2. Organize your documents well in advance
Make sure that you are ready with all the documents such as savings information, assets information and other documents that confirm your financial status at least 30 days before applying for the loan. This can avoid last minute confusions and make the document verification process a lot easier for you as well as the underwriter.
3. Submit required documents on time
Not only collecting and organizing the documents, submitting the documents on time is also very important to ensure the smooth flow of underwriting process.
4. Be clear with all the details you provide
It is important to be clear with all the documents and proofs you provide. Only genuine and correct documents must be submitted during the underwriting process. The applicant is answerable to all the queries related to any confusions regarding the information provided in the documents.
5. Answer the queries of the underwriter quickly
It is always a good practice to respond to the queries of the underwriter as soon as possible. This solves confusions immediately and also aids in continuing the underwriting process without any obstacles.
6. Be clear with all the details you provide
It is important to be clear with all the documents and proofs you provide. Only genuine and correct documents must be submitted during the underwriting process. The applicant is answerable to all the queries related to any confusions regarding the information provided in the documents.
7. Stay in touch with the underwriter
To stay updated with the status of the mortgage underwriting process, it is important to stay in touch with the underwriter. Also, maintaining a regular contact can clear any queries that come up while the processing is being done.
8. Increase your down-payment
It is often a good idea to increase the amount of your down payment, provided that you are able to afford it. Applicants who are prepared to pay a larger down payment have an increased chance of getting their loan approved.
9. Associate with a professional underwriter
Since underwriting is a complex process and it requires a lot of careful considerations, calculations and verifications to ensure error-free processing, it is best to associate with a professional underwriter who has a good experience in the underwriting process. Also, you can approach a company that provides complete mortgage management solutions to stay worry-free about your mortgage processing.
