What Is An Underwriter Mortgage?

What Is An Underwriter Mortgage? While underwriting isn’t a particularly fun part of the home-buying journey, it’s integral to the process. Once you pass this stage, you can see the whole view, and getting down again is a simple run through the grass.

But what exactly is an underwriter, what do they do, and when in the home buying process is one required? This guide covers all you need to know.

What Is An Underwriter Mortgage?

What does an underwriter do?

A mortgage underwriter works for a mortgage lender. They will carry out an in-depth analysis of a borrower’s mortgage application and are responsible for making the final decision as to whether or not to lend.

The underwriter will start off by having a thorough read of a mortgage application, calculate a risk assessment based on the findings, and match it against the borrower’s profile. During the process, they will be looking out for any red flags or inconsistencies and may ask additional questions or request further documentation as needed.

What checks are involved in a mortgage?

The checks underwriters make before coming to a decision regarding your mortgage will be surrounding:

  • Lender policy – requirements you need to meet re. age, legal status, loan-to-values, deposit, credit history, etc.
  • Credit reporting – lender-specific scoring to determine your creditworthiness and ability to repay.
  • Affordability – usually a combination of income multiple and borrower-specific affordability calculations.
  • Property – to check for defective or high-risk properties, construction methods, or materials against the lender’s criteria.
  • Fraud and money laundering – to pinpoint where your money has come from and clarify any anomalies.

Generally speaking, the mortgage underwriter will  conduct these checks in three stages:

Evaluating the risk of the loan:

This is a by-the-numbers evaluation, examining the risk factors of the loan by measuring it against your credit history, looking at your affordability, and whether you present a positive investment for the lending institution.

Making sure you meet the requirements:

There may be specific criteria for the loan (for example a first-time buyer), and it is important that you meet all the requirements for this particular loan. The underwriter may suggest an alternative if this isn’t the case.

Checking documents:

Reading the paperwork and making sure everything has been properly submitted and signed where needed is an important step.

The primary concern for underwriters is whether you are going to pay back the money without difficulty.

Looking at your past credit history is a good indicator, but it won’t be as simple as just reading the overall credit score and ticking a box; underwriters look for patterns with credit problems and try to weigh up whether you are not only financially able to pay

back the money but fiscally aware and reliable enough to willingly do so.

How long does underwriting take?

Given that the underwriting is a predominantly human process, there’s no hard and fast rule surrounding how long it will take. It is very much situation-dependant, and can be affected by:

  • How much experience does the mortgage underwriter have?
  • How complex your application is.
  • How busy the lender is.

For example, if your application is fairly complex it might take a few days for a junior underwriter to carry out the necessary checks to the required standard, whereas a senior underwriter with many years of experience may come to a decision fairly quickly.

Generally speaking though, mortgage underwriting should take no longer than 3-4 working days and almost all applications are complete within a week – though this can easily be extended if more information is requested.

Why would my mortgage be declined during the underwriting process?

There are a whole host of reasons as to why your mortgage application could be declined during underwriting.

Usually, it will be because you don’t meet the lender’s criteria, your circumstances have changed, or red flags or anomalies are spotted within your application. Some of the most common reasons include:

  • Undisclosed instances of bad credit.
  • Too many credit applications within a short timeframe.
  • Outstanding debts.
  • Didn’t meet the affordability criteria.
  • A change in job or income.
  • Inconsistent income.
  • The type of mortgage you applied for was wrong for your circumstances.

Most of the time, lenders will justify their reasoning – but if they don’t, be sure to ask them, or if you work with a mortgage broker, we’ll be more than happy to do so on your behalf.

Seek specialist advice to prevent problems with mortgage underwriting:

Ultimately, the underwriting process is in place to ensure that your requested mortgage and repayment plan is affordable and well-suited to your specific circumstances as a buyer.

What’s the best way of ensuring that this happens? By working with a broker. Our advisors have access to over 100 UK banks and independent lenders, and paired with realms of industry expertise, know exactly which lenders to approach and what products to suggest for someone in your position.

What happens if my circumstances change after It has approved my application?

Once the mortgage underwriter has given your application the seal of approval, you’re pretty much home and dry; a mortgage offer is almost certainly on the way.

That being said, if your circumstances change in the time between you receiving the offer and the sale completion, the lender reserves the right to decline your request for funds.

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