What to Know About Underwriting
Posted by : Admin
There are multiple parties involved in a standard mortgage situation, and one such party is often forgotten about until the time comes when they’re needed: The underwriter. The underwriting process is one that’s present to ensure that you’ve accurately represented yourself as a potential borrower, and that a lender and home seller have done the same.
At Mortgage Investors Group, our mortgage experts will walk you through each step of the process, including underwriting. Here are some basics on what an underwriter uses to look at your finances, and how they carry out their job.
Investigation
In the mortgage world, it’s popular to hear underwriters referred to as “detectives,” and this is actually a relatively apt term. An underwriter is tasked with taking an objective, third-party view of your finances as you’ve reported them. They view things like your credit report, pay stubs, employment history and tax returns, plus potentially some other documents.
From here, they use this information to determine whether you’ve been forthright in your disclosures to potential lenders and sellers. Our next few sections will look at some of the areas they examine during their investigation.
Credit Score
Credit score is the most important area an underwriter will use. It allows them to look at both your current and past financial picture – a credit score will raise any lending red flags from your history, such as a bankruptcy or default. If your credit is lower than expected, you’re not necessarily out of luck: You’ll sometimes still be allowed to provide a letter of explanation to detail the circumstances leading to the low score, and its possible arrangements can be made.
Ability to Repay
A lender wants to know that you can repay the full loan amount properly, and an underwriter will look into this. They’ll use your debt-to-income ratio – your monthly income set against any debt plus future housing expenses. You’ll be asked to provide a full statement of assets.
For more on the underwriting process, or to find out about any of our mortgage options, speak to the pros at Mortgage Investors Group today.
