Underwriting

The process of analyzing a loan application to determine the amount of risk involved in making the loan; it includes a review of the potential borrower's credit history and a judgment of the property value.

If your credit score is above 619, your loan can most times be submitted to Fannie Mae Direct Underwriting(DU). This takes minutes to do, and returns an instant approval if you qualify.

An underwritier reviews the appraisal, title report and may do additional verification of employment, mortgage payments, and credit. They have ultimate power and decision authority over the approval of your loan.

If the borrower does not meet the loan program guidelines but otherwise the deal makes good sense an underwriter has the ability and authority to grant an exception. Exceptions are more commonly given on lower LTV loans then they are on 100% LTV loans.

All loan programs are underwritten differently. Two different borrowers both refinancing their homes may have different underwriting requirements and rates for their loan program.

The underwriting process nowadays is computerized. Underwriters' jobs are mostly to make sure that the submitted credit documents support the information entered in the automated underwriting systems. Underwriters also at times grant exceptions to required documents. Underwriting is a process that ensures the credit worthiness and deliverability of the loan file to secondary investors.

One way that the loan origination process can be viewed is that the Loan Officer is working on behalf and looking out for the best interest of the borrower and the underwriting team and the underwriter is looking out for the best interest of the lender.

FHA and VA loans are also Automatically Underwritten with these underwriting tools. Construction loans are now underwritten using these tools and it cuts down on the time it take for the mortgage process to be completed.

» DISCLAIMER: The information contained in this article on 'Underwriting' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.