Mortgage underwriting, or Real Estate underwriting, is the process in which mortgage lenders verify your assets and credit-worthiness to get a home loan. All loans go through this step before the lender can give you the funds for a mortgage. It can be as quick as two to three days, but typically takes over a week to finish and happens right before closing.
Mortgage underwriting standards have become more heavily regulated because of additional requirements enacted by the Consumer Financial Protection Bureau (CFPB) after the 2008 housing market crash.
Reviewing and confirming your application and documentation, employment, and financial history
Making sure all documents are present and accurate according to mortgage industry standards
The 3C’s of underwriting include:
Underwriters will also pay attention to your debt-to-income (DTI) ratio to make sure you have enough money to cover your current financial obligations even if you’ll take on a mortgage.
While the mortgage underwriting process can vary according to lenders and the institution they belong to, all lenders will most likely involve these three C’s when assessing your risk as a potential borrower. Understanding these factors can help you understand what to expect with the process for you to have a better chance of getting a mortgage.
However, if your underwriting was denied due to problems like a low credit score, high DTI ratio, and insufficient cash reserves, it might take time to resolve these problems before you can complete the loan approval.
Respond promptly to your underwriter’s request for more information and supporting documents.
Protect and maintain a good credit score during the entire process and until you close on the home.
Keep in touch with your lender and/or mortgage broker to check on the status of your application.
