What Does a Mortgage Underwriter Look For?

Buying a home – you know the deal from your end. But there is much more to buying a home that just the budget and home search. Do you know what happens after you talk with a loan officer and provide the paperwork for your application? It falls into the hands of a mortgage underwriter. 

What Does a Mortgage Underwriter Look for? 

Simply put, a mortgage underwriter determines whether or not you qualify for a home loan, or if you need to provide more information. To do this, the underwriter needs a bunch of information from you, including: 

  • Pay stubs 
  • Banking statements 
  • Access to your credit report 
  • Details of any assets and debts you own 

Based on these details, your mortgage underwriter will approve, decline, or suspend your application. 

If you are approved, you will still need to meet certain conditions to get your loan document. Your underwriter will give you this list. 

If you are suspended, then your underwriter needs more information from you before they can make a decision. This will increase the time it takes to approve your mortgage. It’s better to have all your documents ready to avoid this situation. 

If you find that your application is denied, ask your mortgage lender why this happened. Maybe you wanted to borrow didn’t match your finances, or maybe you need to tweak your credit score. 

Do Underwriters Work for the Mortgage Lender?  

They sure do. Their expertise comes into play after the loan comes in the door. 

Deconstructing Your Mortgage Application 

Do you know what an underwriter actually does with your application? What does a mortgage underwriter look for? They look for the three Cs: credit reputation, capacity, and collateral. 

  • Credit reputation: This includes your credit history, such as whether or not you pay your debts on time and in full. It also includes any bankruptcies, foreclosures, and judgements you could have. 
  • Capacity: This addresses whether or not you can pay your debts on time. The underwriter will look at your salary, how much money you have in the bank, any existing loans you have, and how much debt you have as compared to your income. Less debt and more cash is better. 
  • Collateral: This aspect takes a look at the house you want to buy and how much money you want to borrow. The underwriter will examine how much down payment you have, the property you want to buy, and the ability to sell that property in the future. 

Underwriters, Risk, and You 

What does a mortgage underwriter look for? When an underwriter examines your mortgage application, they want to know if you are a good risk. To put it in a different way, how likely are you to pay your mortgage? It is not purely some cut-and-dried formula. When they look at the three Cs, they don’t look at each one independently. Rather, they are looked at together to appreciate the level of risk you represent. 

For example, if you have a steady job, a decent down payment, and pay your bills on time, chances are you will get the mortgage you want. But what happens if you have that down payment and great credit history, but own a business? Your income can fluctuate, which – theoretically – can make you look like a not-so-great credit risk. This is where the experience of the underwriter comes in. They will be able to tell how well you can weather those changes, and can recommend you for the right mortgage product for your services. 

How Long Does Underwriting an Application Take? 

That really depends. The more you want to borrow, the more time your underwriter will need to verify your financial situation. If you don’t provide all of the necessary documents, then this also takes more time. If you have a unique employment or financial situation, then your underwriter may need extra time to figure out what to do. 

Tip: To make the process as quick as possible, make sure you have all documents ready at the time of your application. 

You and Your Mortgage Underwriter 

What does a mortgage underwriter look for? Understanding what an underwriter does can help you make your mortgage application go that much faster. If you need an experienced and knowledgeable professional, look no further than Shamrock Home Loans. They pride themselves on building relationships so that you know you will get quality underwriting service. Call us today, and get started on the road to home ownership now. 

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