What Is Mortgage Underwriting?
What is mortgage underwriting? Specifically, it is the process where a lender will analyze the application for a mortgage and either approve it or deny it.
An underwriter will usually consider three important factors in determining the risk and the terms involved with the mortgage. They are collateral, capacity and credit.
What guidelines does mortgage underwriting follow? Lenders will create the specific guidelines that should be followed. In addition, computer programs can help assess whether the mortgage is too much of a risk or not.
Using the tools provided the mortgage underwriter will then make the ultimate decision on whether the loan will be approved or not.
An important aspect of underwriting consists of doing an accurate assessment
of the income of the borrower. All sources of income must be accounted for in determining the probability of the payback of the loan. Here are some examples of income reported by borrowers: wages, bonuses, gratuities, self-employed income and commissions.
The mortgage business has had to endure some very difficult times recently with major companies such as Fanny Mae experiencing severe financial problems. Because of these problems, lenders are now making it more difficult to qualify for a mortgage, which is much better for the industry as a whole.
Most lenders take advantage of automated computer programs to perform the majority of the mortgage underwriting tasks. Financial information provided by the borrower is entered into the program, which then helps the lender get an accurate assessment of the borrowers overall financial picture. The borrowers credit score and debt ratio is also considered.
The automated programs allow the underwriters to process more loan applications as it greatly reduces the amount of time spent on each loan.
Article Source: http://EzineArticles.com/5421380
An underwriter will usually consider three important factors in determining the risk and the terms involved with the mortgage. They are collateral, capacity and credit.
What guidelines does mortgage underwriting follow? Lenders will create the specific guidelines that should be followed. In addition, computer programs can help assess whether the mortgage is too much of a risk or not.
Using the tools provided the mortgage underwriter will then make the ultimate decision on whether the loan will be approved or not.
An important aspect of underwriting consists of doing an accurate assessment
of the income of the borrower. All sources of income must be accounted for in determining the probability of the payback of the loan. Here are some examples of income reported by borrowers: wages, bonuses, gratuities, self-employed income and commissions.
The mortgage business has had to endure some very difficult times recently with major companies such as Fanny Mae experiencing severe financial problems. Because of these problems, lenders are now making it more difficult to qualify for a mortgage, which is much better for the industry as a whole.
Most lenders take advantage of automated computer programs to perform the majority of the mortgage underwriting tasks. Financial information provided by the borrower is entered into the program, which then helps the lender get an accurate assessment of the borrowers overall financial picture. The borrowers credit score and debt ratio is also considered.
The automated programs allow the underwriters to process more loan applications as it greatly reduces the amount of time spent on each loan.
Article Source: http://EzineArticles.com/5421380