What Is Underwriting? Here's What to Expect | Daily Podcast 177 |
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Loan underwriting may sound mysterious, but chances are, you already experienced a similar (albeit simpler) process for your pre-approval letter. While pre-approval makes you competitive to sellers, it is not an official guarantee from your lender. Underwriting makes it official. It’s the final step for your lender before you close on the property.
Because underwriting is typically a hands-off part of loan approval, many home buyers and property investors don’t know what to expect from this financial process. There are steps you can take to ensure this goes as smoothly as possible because it’s important to know what’s happening behind the scenes. What is underwriting? Mortgage underwriting is the process during which your lender (whether a bank, broker, or credit union) decides if you qualify for the mortgage that will buy your property. Because you’re asking to borrow such a large sum, the lender isn’t going to hand it over without some thorough investigation into your financial background. A team of people working for your lender (underwriters) will look into your finances and the prospective property. From there, they will decide to extend a loan. What does an underwriter do? After you go under contract, an underwriter will verify your income, debt, and assets. This is all based on the documents you submit per their request—and, yes, you will need to resubmit what you already gave them during the pre-approval process. They will then assess the property itself with an appraisal and title search. After gathering all the information they need, they will determine the risk of lending to you and either approve or deny you that whopping home loan. Keep reading the article here: https://www.biggerpockets.com/blog/what-is-underwriting Subscribe to the BiggerPockets Channel for the best real estate investing education online! Become a member of the BiggerPockets community of real estate investors - https://www.biggerpockets.com |