It takes a team to successfully purchase a home.
From the lender, real estate agent and office support staff, a lot of moving parts work in concert to provide services to help individuals reach their dreams of buying a home.
The behind-the-scenes role of an underwriter is crucial to the process because they are responsible for pushing the loan along.
A mortgage underwriter’s primary task is to assess the borrower’s ability to repay a loan. Essentially, underwriters determine the risk of lending.
Credit scores, debt-to-income ratios, employment details and other financial information from the applicant are closely examined by underwriters. This discovery presents the lender with a financial snapshot used to see if the borrower meets the necessary requirements to obtain a loan.
Using internal and other federal guidelines set forth by Freddie Mac and Fannie Mae, underwriters screen applicants for conforming loans, which meet certain conventional criteria so they can be sold into the secondary mortgage market.
Loan applications will receive one of three designations. A green light means the applicant is approved unconditionally. A yellow score indicates a conditional approval. In order for the borrower to elevate his or her application, some additional conditions must be met. A red light means a borrower has been turned down.
The underwriting process takes between three days or several weeks to complete. Not satisfying the lender requirements and not providing information can delay the underwriting work. Once an underwriter signs off on the loan, the applicant is close to finalizing the transaction. At this junction, the lender will have the paperwork prepared for the escrow company, which will facilitate the final stages the home-buying journey.
If you have any questions about this process, feel free to contact us!