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Home Finance Mortgage Underwriting – Finding the Risk of Offering Mortgage Loans

Mortgage Underwriting – Finding the Risk of Offering Mortgage Loans

Underwriting of mortgages is a long term process and it deals with the determination of a borrower’s capability to repay a loan amount. Now there are lots of software to support the functioning of underwriters.

Mortgage UnderwritingPHOTO BY FLICKR.COM/THETRUTHABOUT

Mortgage Underwriting - Examines the Capability of a Borrower

An underwriter must have thorough knowledge regarding the specific mortgage acquisitions. Mortgage underwriting mainly focuses on a lot of key factors. A borrower’s eligibility to repay the loan amount is determined on the basis of these key factors. Borrower’s credit history is one of the most important factors among them. Borrower’s income, his initial down payment, the rest loan amount, etc are the other important key factors. An underwriter can easily understand a borrower’s loan repayment pattern if he examine the credit history of a borrower. On the basis of these factors, an underwriter determines the tenure of loan and appropriate interest for the borrower. In mortgage underwriting, interested rate is calculated on the basis of variable and fixed rate mortgage.

Mortgage Process - Understand it Thoroughly

Procedures of loan are very complicated and a large number of respondents feel difficulty in understanding mortgage process. Before getting a loan, a borrower has to pass through six major steps, which may slightly vary from person to person. First step is the financial assessment of the borrower. There must also be a pre approval for applying for a loan. Origination and processing of mortgage is the next step involved in this process. Next comes underwriting process. During this process, you should also provide some additional documents as well. You are eligible for getting a loan if the lender is satisfied with all the documents provided by you. You should also provide proof of your income, proof of house owner’s insurance, property appraisal for determining value of house, cash reserves in bank, etc. The final step of mortgage process is closing, which is also known as settlement.

Mortgage Underwriters - The Responsibilities

Collection of documents is the primary procedure of a mortgage and a mortgage underwriter must understand the qualification of mortgage loan, pre approval and final approval. He determines the eligibility of a borrower. After varying all documents provided by the borrower, an underwriter checks it again with requirements. Then, he takes decision on sanctioning a loan. A mortgage underwriter usually checks income, equity, down payment, credit score, credit history, etc. He must also understand the ways to repair a bad credit rating. He must also be aware of the debt and income ratio of a borrower. Underwriter must be responsible for evaluation worth of security and the sum of loan.

Written by Simon Harris

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