But what exactly is an underwriter and what do they do?
Computer says ‘yes’, what happens next?The first stages of your mortgage application are processed by a computer or two. Checks done against your credit history, analysis of your income and a evaluating the size of your potential loan can all be done without a problem by some software, but the final decision will often come down to a person – the underwriter.
The underwriter will take a good look at your mortgage application, calculate a risk assessment and match it against your profile. They will look for any strangeness or inconsistencies in your application and question or ask for more documentation as needed. At the end, the underwriter will either pass the mortgage, suggest amendments to the deal, or reject it.
What is the underwriter looking for?There are three stages the underwriter will go through:
- Evaulating 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.
When the underwriter is your friendIt is easy to see the underwriter as an obstacle you must get past, rather like the boss fight at the end of the level of a computer game, but quite often the underwriter is your friend and not a foe. He or she will be able to see a pattern of determined improved credit with anyone trying to build up their financial dealings after a period of bad credit, and will make an assessment based on experience that might pass your application with a poor credit score that a computer would simply reject.
In some instances, the underwriter will request more information, giving you the chance to explain any poor history and increase your chances of an application being approved.