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What is the Mortgage Underwriting Process? Feature Image
Posted on 09/27/2121 6 minute read

What is the Mortgage Underwriting Process?


As a first-time homebuyer, there may be terms thrown around that you’re not familiar with. Even if you’ve been through the process before, you still might not be sure exactly what these terms mean. 

After you find the home of your dreams and you’re ready to purchase, you’ll submit a mortgage application and go through the mortgage underwriting process. 

That process may sound daunting but it’s a basic part of every loan where the lender, bank, or credit union makes a determination about your loan application and decides whether you’re eligible for certain financing options. 

You’ll want to feel prepared for your homebuying process so let’s dive into what exactly mortgage underwriting is, what’s required of you, and how long it takes until you can move into your new home. 

What is the Mortgage Underwriting Process?

The mortgage underwriting process is when all of the financial information you submitted to the lender is verified and when the lender assesses the risk of lending to you. 

The information, or “risk factors” that they assess include your identification, credit history, income, debt, cash reserves, equity, assets, and anything else that could factor into your loan. 

There are underwriting guidelines set by government-sponsored enterprises Fannie Mae and Freddie Mac that most lenders follow. 

First, you must submit a mortgage application along with documentation. Though you may have been pre-approved already, the underwriting process is where the final determination for approval is made. 

The lender will conduct an appraisal on the property you wish to buy and research to ensure that its title can be transferred. 

The last step is when they make their determination of whether you’re approved.  

How Long Does the Process Take?

This verification process can either be done manually by the underwriter or ran through automated software. Automation makes the process quicker but is subject to mistakes. Some lenders use a combination of manual and automated underwriting to ensure a proper assessment.

Whether manual or automated, underwriting can take anywhere from days to weeks depending on the lender’s process, how busy they are, and the complexities of your financial situation. It also depends on your responsiveness.

It’s important to reply promptly if your lender reaches out with questions or asks for more documentation. The longer you take to respond, the longer the process gets delayed. 

Underwriting is just one part of the entire loan and homebuying process, it typically takes at least 45 days to close on a home purchase.  

What Information is Required?

The underwriter must have all proper documentation to accurately assess the risk of your loan. This includes running a credit check to determine your credit score and history, and information about the property you wish to buy. 

Basic financial information you will be asked to provide includes: 

  • W-2 forms
  • Pay stubs
  • Bank statements
  • Tax returns
  • Any other proof of income (alimony, child support, social security)
  • Two years of employment history
  • Employment verification
  • Details on other loans or debts (car loans, student loans, personal loans)

These documents will help paint a full picture of your financial situation. The lenders may have questions or require additional documentation as they review it. It’s important to have clear and consistent communication with them so as not to hold up the process. 

Other items that may factor into the loan decision include: 

What Happens when Mortgage Underwriting is Complete? 

Once all is said and done, the underwriter (or team of underwriters) will make a decision. 

You may get “approved,” “denied,” “approved with conditions,” or “suspended” (which means more documentation is needed or that they couldn’t verify something in your file). In any case, your lender will reach out to you with the next steps. 

If you are outright denied, your lender should give you an explanation for the denial. Once you know what the problem is, you can address the issue in hopes of reapplying when it’s fixed. 

For example, your debt-to-income ratio could be too high for the lender, in which case you might want to work toward paying off debts or even increasing your income. If you have low or no credit, you’ll have to work on building it up, before reapplying. 

Once you’re approved for the loan by the underwriters, you’re officially given the go-ahead to schedule a closing on the home. This is something you will work out with your lender.

It’s important to know what to do and what not to do between the time of your loan approval and your actual closing. You’ll want to do your best to keep your financial situation the same as when you applied. If you change employment or open a new line of credit, that could create a need for a whole new underwriting process based on your new financials.

If you’re concerned about this or absolutely need to change your employment before you close, be open and honest with your lender and ask for their guidance. 

After approval, you’ll receive a closing disclosure that outlines the terms of your loan, estimated monthly payments, and closing costs. Upon closing, you’ll need to bring your ID and a cashier’s check for the closing costs, assuming your down payment arrangements have already been made.

After everyone signs their paperwork and hands over the keys, congratulations! You’ve successfully navigated the mortgage underwriting process and are now a homeowner.  

Start Your Home Buying Journey with Homefinity

It can be easy to feel like a small fish in a big pond when you’re buying your first home.

But with Homefinity, you won’t go through the loan process alone. 

The right mortgage loan officer for you will offer the level of support you require, whether it’s in-depth guidance or quick, convenient assistance depending.

Don’t let simple, first-time buyer mistakes disrupt your loan process. A Homefinity loan officer can provide the consistent communication and support you need to ensure you will soon be in a home you love. 

Contact us today with questions or to get started online now with your loan process.

Image by aymane jdidi from Pixabay


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