14 Jun What is the underwriting process?
When we are talking mortgages, the term underwriting simply refers to the process of assessing the risk of providing a mortgage to a prospective borrower on a certain piece of property. In other words, a mortgage company will assess the risk of the applicant and the property that is the subject of the mortgage, prior to issuing a loan.
To better understand this process, we have broken it down into different steps. The first and perhaps most important one is to get prequalified. Even before you begin looking for a house, you should get prequalified for a loan, at which point the lender will review your basic financial information, such as your income and your debts, and will run a credit check. Don’t forget that getting prequalified will be very helpful in determining what kind of mortgage fits your budget.
On top of these factors – the credit worthiness, the past and present income of the applicant, the net worth, and the current monthly budget of the applicant – a mortgage underwriting may require additional documentation to verify the information of the applicant, or to answer questions raised in the underwriting process.
As part of the underwriting process, an assessment of the property is also required, which is normally done by a formal appraisal. The licensed real estate appraiser will be looking for key factors such as the fair market value of the property being sold and the condition of the house – can it be saleable?
If you are interested in learning more about the underwriting process, please do not hesitate to contact us!