A mortgage underwriter is someone who reviews the application, credit and other information supplied by a potential borrower to a mortgage company when they want to purchase a new home. Typically, mortgage companies will employ underwriters to complete this process. There are underwriting companies that outsource this work as well. Independent underwriters are used by smaller companies that can’t justify having full time underwriter on their staff. They work for many different lenders to help with the underwriting process.
Does the Mortgage Underwriter Decide if an Application is Approved?
Mortgage underwriters are specially trained to look over the borrowers qualifications and make a decision about whether they would be a good candidate for a specific loans program. If they feel that an applicant does not fit a program, they will be able to pinpoint loan programs that would be a better option for the situation.
What About Credit Reports?
A mortgage underwriter’s job is to assign each applicant a risk factor. Those with excellent credit histories will be considered low risk and can be easily approved for competitive loan programs. Those who miss payments and have defaulted in the past will often be rejected or offered high risk loan programs that come with higher down payments and less attractive loan rates and incentives.
Where Do Appraisals Come into the Process?
Property appraisals are important to a mortgage underwriter because they need to ensure that a borrower is taking out a loan for a home which they will buy for a value that is close to their loan amount. If a borrower were to buy a home with an inflated appraisal and default, the property value would not be high enough for the lender to regain some of its lost money. Therefore, an underwriter must be aware of property rates and how the market is affecting housing values and prices in the area where the borrower intends to purchase a home.