The Mortgage Underwriting Process Explained
The Underwriting Process
Most people are familiar with the beginning of the mortgage process – getting pre-approved by a mortgage lender to apply for a home loan, and the end – funding the loan and moving into their dream home.
However, the middle can get a little murky if you’re not familiar with the mortgage underwriting process.
The Role Of An Underwriter
Underwriters handle the “middle part” of a borrower’s loan application. Underwriters are essentially the loan gatekeepers who determine if a loan is acceptable to be funded. Underwriters must make sure that every compliance box is checked and every possible issue is addressed, and ensure the loan can be salable in the secondary market.
Underwriters have two primary concerns when determining the acceptability of a loan application:
1. Assess if the borrower can repay the loan.
Underwriters look at your employment, assets and credit history to determine if you will have the means to repay the loan. They’ll also evaluate your loan-to-value ratio of the loan and determine if you will need Private Mortgage Insurance (PMI).
2. Review and verify all other documentation associated with the loan.
Investors will only buy loans if they are 100% compliant with all underwriting guidelines and are “salable” on the secondary market. Most guidelines for salable loans are set by the housing agencies like Fannie Mae and Freddie Mac, by HUD (for FHA), or by investors that buy loans on the secondary market. No matter how perfect a loan looks, it will not be funded or sold to investors if it is not 100% compliant. Underwriters will review the entire loan file as well as all tax, title, insurance, and closing documents to ensure that everything is accurate and properly completed.
Underwriting At JVM Lending
At big commercial banks, the underwriting process can take a long time. JVM is a mortgage bank and can underwrite loans in-house – thus allowing our mortgage process to move much faster than big banks and most brokers (who have to submit loans to unaffiliated “wholesale lenders”). Keeping underwriting in-house and close to JVM’s loan origination staff guarantees service levels and speed that are nearly impossible to beat.
Working With Your Underwriter
Communication is key when working with your lender during the underwriting stage. Your lender may request additional documentation or records as the process moves along, and additional concerns arise. An example would be an underwriter’s request to explain unusual deposits on a bank statement, or inquiries on a credit report.
Timely responses to your underwriter’s inquiries will help ensure that your lender has all the correct information and will help JVM fund your loan that much quicker.
Founder/Broker | JVM Lending
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