3 Things To Know About The Underwriting Process With A Mortgage Loan
by Albane Francois
You might not understand the entire mortgage process, but you can always ask a lender to answer any questions you might have. For example, do you wonder what the underwriting process is with home loans? Many people have questions about this, and you might, too. If so, here are three things you might want to know about it.
1. When the Process Occurs
The first thing to learn about the underwriting process is when it occurs. The underwriting process is the last step that happens before closing on your new home loan. Before this process happens, your lender handles the loan work. They will ask you for information and documents and evaluate everything related to your finances and the home you want to buy. Your lender cannot close on the loan, though, until the loan work passes through the underwriting department. The underwriters must approve the loan for this to occur.
2. Why It Occurs
Secondly, you might wonder about the purpose of the underwriting process. This process serves two main purposes. The first is to ensure that a person meets the requirements for the loan program that the lender offers them. The second is to ensure that the lender's risk level is within the parameters they can accept.
3. The Steps that Underwriters Take
When the underwriting department receives loan paperwork, their job is to scrutinize every detail of it. They might begin with the borrower's information. They will run a credit check to ensure that the person's credit score is still around the same amount. They will perform an income verification to make sure the person has a job and earns the amount they claim. They might run some other calculations, too, such as the person's debt-to-income ratio.
Next, they will verify the details about the house that the person wants to buy. For example, they will examine the appraised value compared to the amount the person is paying for the house. They do this to calculate the loan-to-value ratio, which tells them how much the person needs to put down on the purchase. These are just a few of the steps they might complete during this process.
When you get a home loan, you cannot close on it until the underwriting department processes the loan. If the underwriters reject it, you will not get the loan. If they approve it, you can schedule a closing date. You can learn more about this process by speaking with a mortgage lender such as FCCU - First Community Credit Union.
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About Me
How many times have you put off making repairs around your home because you didn't have the money to make them immediately? Have those decisions caused even more repair bills because you waited to make the repairs? I have done this several times in the past, and, oftentimes, not making those repairs have cost me far more to complete because the damage spread. The whole reason I created my blog was to help others find the financing they need to make home repairs without worrying about choosing the wrong type of financing option. Hopefully, my hard-learned lessons will help you avoid the same struggles that I have undergone.