Mortgage underwriting and all there is to know
Well mortgage underwriting might seem like just another thing that gets in your way of your desired home, but it doesn’t have to be this way. It is certainly understandable that this happens because of overall safety of the landers. Basically, a third-house entity(most of the times) hired by the lander will look into certain things and inform the lander if either you are eligible or not for a mortgage.
Seeing how they are the ones who approve your mortgage or not, it is a good idea to understand what they are looking for in you, so let us have a quick look.
How does mortgage underwriting work?
As stated, an underwriter is an entity which will analyze if you are worth the risk when taking that desired mortgage. It is a process that happens in the background but it is advisable to know what they are looking for. Basically, they will check all the available information in your application and documents that you gave. Calling your employer to see if you really have that stated job, checking wheter or not your credit score is sufficient, income, debts, past history, pretty much everything there needs to know.
Not only that, but they will also look into the house that you want to buy. See if it is not over the market value or under and help the lander adjust their rates and terms of the end mortgage. They look if the house has any bad history, any unpaid fees, claims of another person. They will look if the house is in any danger of a natural calamity, most common one being a flood.
Can things interfere with the process?
Yes, there are a bunch of issues that can happen. Low credit score, high debt, insecure job, these are only a few factors that might influence the underwriting negatively. A low debt-to-income ratio might make you look unsafe in keeping up with the mortgage monthly payments and this is often a risk that landers do not want to take. The appraisal can go bad and cancel the whole mortgage all together. Lack of communication might also be an issue if you are not responsive. The lander might need more information and if you will not give it in time things may become sour.
But you can take extra security measures and try and stop all these before they arise. Giving all the needed information beforehand, checking to see the status, keeping records of the conversation you had with your lander, try to aid the procurement of documentation.
How long will it take?
Well it depends on many different factors. The underwriter’s experience and performance is something quite important. A poor and inexperienced underwriter will take a lot longer to do all the needed processes and tasks. The number of mortgage requests, because there might be extra people in the queue. Because of this, the duration will vary to a degree. It can range from as quick as two days to as long as two weeks when you will receive a final decision.
Will this mortgage underwriting affect my finances and how is it affected by them?
The underwriting itself should not cost much or anything. A professional appraisal for your home might cost around 300$-500$. Most of the times, the lander will take care of the costs in their own specific way, but it won’t hurt to ask.
The underwriting can be affected by any sudden changes. A new career can affect it greatly, for better or worse. A new debt might damage your debt-to-income ratio and “take a bite” out of your credit score.