The home buying experience can be an overwhelming experience that can be exhilarating, fun, stressful and exhausting. The process of securing a mortgage, successfully bidding on a home and completing the transaction can be lengthy, complex and involve seemingly endless professionals. Those professionals may include a buyer’s agent, a loan officer, a home inspector, title […]
What is an Underwriter?
When applying for a Kansas City home loan or insurance, your application is carefully researched and considered by an underwriter hired by the mortgage company. The underwriter has a very important job in making sure you are a good candidate and that all information presented is correct and complete before you can be approved for a home loan.
Helps Reduce Risks for Mortgage Companies
Lenders won’t want to lend to you if you cannot afford to pay them back. Underwriters help reduce the risk to lenders by researching applicants and minimizing the hazard of high risk claims like an applicant applying for more than what they can afford.
Approves or Declines Applications
When you send in your application to get approved for a home loan, your request is sent to the company’s underwriter who will verify the information you provided. For example, they may call your employer to confirm that you work there, and look at your credit score. In doing so, they determine if you are able and willing to pay off your home loan.
If they find that you cannot afford the loan, they will put together a denial letter letting you know why your application was rejected. If the mortgage company’s underwriter determines that you are not a risk, then you are moved on to the next step of the home buying process.
Arranges Appraisals & Other Services
Is the home you plan on buying worth more or less than other homes in the area? An underwriter will help lenders appraise the home and make sure that it isn’t going to be affected by natural disasters like floods. With this information, the underwriter will determine if the loan amount you are requesting matches the value of the home.
Automated & Manual Underwriting
While most underwriting is done manually, most aspects are done by a computer program in what is called automated underwriting. An underwriting program helps the underwriter adhere to guidelines and quickly assess the risk of an applicant. Once the program has done its job, the underwriter will double check all verifications and documents to make sure they are accurate and match the information given. If they don’t match, the process is started again after the appropriate documents are sent back to the processor for verification.