Now that your application is accepted, you need to know that the entire procedure of home buying goes through a procedure known as loan underwriting process. Yes, you are reading this right. Loan underwriting is a crucial component when it comes to the home buying procedure. This is because the closing procedure will not take place if underwriting does not happen in the right manner. Let us dive into this piece of information and learn everything about underwriting.
Explaining underwriting
Are you new to the procedure of loan underwriting? Do not worry. We have got your back. Even though it might sound a bit daunting to you, know that underwriting in simple words means that your lender will verify all the information. From checking your income proof to property details, tax, and debts, etc, will be verified by the lender. Only then an order will be issued, and your loan application will be accepted.
The procedure of loan underwriting takes place behind the scenes. However, this does not mean that there is no involvement of the biyer. Your lender may ask for the required documents. In addition to this, the lender may also ask questions if any. Questions like “where did all the money come from”, how much is your monthly income, and more can be asked by them.
What is the job of an underwriter?.
With the help of a loan origination system, your future home undergoes an appraisal. This appraisal procedure is performed by licensed, experienced, knowledgeable, and skilled professionals. An underwriter will have a look at your finances, and determine how much he/she can lend to you. The underwriter will also help the lender decide whether or not he/she should be accepting your loan application. In case all the necessary documents are not offered by the lender, there are chances that the lender might reject your loan application. Ultimately, the underwriter will also make sure that the buyer does not get a loan more than he/she can afford. In case you are not satisfied with the loan amount as a buyer, you can always deny it. An underwriter will do the following:
- Check your credit history: Underwriters do take a look at the credit score. They not only check your history but also look for other late payments, overuse, and much more.
- Order for an appraisal: An order for appraisal will be made by the underwriter to ensure that the amount the lender is offering matches with the market value of the property.
- Verifying monthly income and employment: Documents like monthly income and employment proof should be provided to the lender before the final closing.
This is everything you need to know about the loan underwriting process. We hope this piece of information has helped you gather all the information regarding an underwriting procedure. To learn more, get in touch with a loan origination software expert today.
