What Is Involved In The Mortgage Underwriting Process?

What it is

The mortgage underwriting process is, very simply, the arena in which the lender makes the decision to approve or decline the home loan request. Every lender has guidelines under which they will approve a mortgage loan. The most common of these involves credit history, mortgage or rental payment history (which may of may not be a part of the credit report), job history and work stability and income. The underwriter will gather this information and then determine whether, as presented., it meets the guidelines of the company. If the documentation meets the criteria, the loan request will be approved. If the information does not meet the guidelines then the loan is declined.



What you need

Many lenders have established minimum credit scores for which they will approve home loans. If the borrower already has a mortgage, it will most likely be on the credit report. Not being late more than one times in the last year is a normal requirement. The same would be needed for a rental history which is requested through a verification of rent (VOR). A stable work history is desired, which is one or more years in the same job or field. The last requirement is income. The underwriter will ask for two years W-2’s and the latest month’s worth of pay stubs. This will give the underwriter a good indication of the borrower’s finances. They will also be required to meet the company’s DTI ( debt to income ratio) requirement ) to receive a full approval. The DTI is the percentage of the borrower’s total monthly gross income which goes to the full mortgage payment ( PITI-principal, interest, taxes and insurance) and the other verified customary monthly expenses.

The result

If the required information can be verified and fits the lenders’ guidelines, the loan request is approved. The underwriter can also request more information before making a final determination or the underwriter could decline the loan request.

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  4. How Do Mortgage Loans Get Approved?
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