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Smarter in 60 Underwriting

What happens during Underwriting?


Mortgage underwriting is a crucial step in the home-buying process. It is a process in which lenders evaluate a borrower’s financial information to determine whether they are eligible for a loan. Underwriting helps lenders assess a borrower’s risk and determine whether they are likely to pay back the loan.

The mortgage underwriting process begins when a borrower submits a loan application. The lender will then review the application to make sure that the borrower meets the lender’s criteria. This includes verifying the borrower’s employment, income, assets, and credit history. The lender will also take a look at the borrower’s debt-to-income ratio and credit score.

Once the lender has reviewed the borrower’s application, they will issue a pre-approval letter. This letter is a conditional statement that the borrower is eligible for a loan pending further review.

Next, the lender will order an appraisal of the property. This helps the lender determine the value of the home, which is used to determine the loan amount. The appraisal will also be used to determine the amount of the down payment and closing costs.

After the appraisal has been completed, the lender will review the borrower’s documents to confirm that all of the information is accurate. This includes looking at the tax returns, bank statements, and other documents that verify the borrower’s income and assets.

Finally, the lender will issue a loan commitment letter. This letter is a formal agreement between the lender and the borrower that states the amount of the loan, the interest rate, and other details. Once the loan commitment letter is issued, the borrower can move forward with the home-buying process.

Mortgage underwriting is a lengthy process, but it is necessary to ensure that the borrower will be able to pay back the loan.