How Do Underwriters Approve Mortgage Loans?

How Do Underwriters Approve Mortgage Loans Explained

Mortgage Underwriters play the most important role in the mortgage process. Underwriters are the mortgage professionals who approve or deny you mortgage loan. There is no reason why a loan should get a denial if it was properly qualified by the loan officer. Unfortunately, like in any other professions, there are underwriters who will drag their feet and will issue conditions after conditions after the initial conditional loan approval which does not happen with CrossCountry Mortgage.

How do underwriters approve mortgage loans?

  • Mortgage underwriters are the people who decide whether to approve or deny a mortgage loan application.
  • Mortgage underwriters are trained mortgage professionals who have a lot of responsibilities to their employers.
  • One mistake on one mortgage loan file may cost the mortgage company a lot of money.
  • If mortgage underwriters do not follow the federal minimum mortgage lending guidelines as well as their investor mortgage lender overlays, that may mean that the mortgage loan is not salable and that the mortgage loan needs to be kept in house where the mortgage lender will be stuck with the loan until the borrower refinances out of the mortgage note.

Lending Guidelines Mortgage Underwriters Follow

How Do Underwriters Approve Mortgage Loans?  

  • Mortgage underwriters needs to follow two types of mortgage lending guidelines as well as their own lender overlays.
  • Federal lending guidelines needs to be followed by all mortgage underwriters and mortgage lender overlays depends on the individual mortgage company because each lender has their own lender overlay requirements.
  • Federal lending guidelines are specific mortgage lending guidelines on the particular mortgage loan program.
  • For example, FHA mortgage loans need to adhere to FHA Guidelines.
  • Conventional Loans needs to adhere to Fannie Mae and Freddie Mac mortgage lending guidelines.
  • VA Loans need to adhere to Department of Veteran Affairs mortgage lending guidelines.
  • USDA Loans need to adhere to USDA Rural Development mortgage lending guidelines.

How Do Mortgage Underwriters Approve Mortgage: Overlays

The Gustan Cho Team at CrossCountry Mortgage is one of a few national mortgage companies in the nation that has no lender overlays and will just go off DU/LP FINDINGS. Overlays are mortgage guidelines that are in additional to the government guidelines set by FHA, VA, USDA, FANNIE MAE, and FREDDIE MAC.

How do underwriters approve mortgage loans? Overlays

  • Underwriters need to make sure that borrowers meet minimum lending requirements on the particular loan program.
  • FHA Minimum credit score requirements are 580 FICO and debt to income ratio requirements is 43% DTI if borrower has credit scores under 620 FICO. If over 620 FICO, back end debt to income ratio can be capped at 56.9% DTI and the front end debt to income ratio is capped at 46.9% DTI. Many lenders will have overlays on credit scores and debt to income ratios. Most lenders want a 620 FICO Credit Score and debt to income ratios not to exceed 50% DTI. However, The Gustan Cho Team at CrossCountry Mortgage has no overlays on credit scores and debt to income ratios and will just go off the automated findings.
  • Outstanding collections and charge offs do not have to be paid on FHA Loans and VA Loans. However, most lenders will have overlays on collections and charge offs where they will limit the amount of collections or charge off account balance you can have or have you pay off your unpaid collections and/or charge off accounts. The Gustan Cho Team at CrossCountry Mortgage does not have any overlays on collections and charge off accounts no matter how much the outstanding balance is.

Conditional Mortgage Loan Approval

Once a mortgage underwriter has thoroughly reviewed the mortgage loan file and has determined that the mortgage borrower meets all federal mortgage lending guidelines as well as the investor mortgage lending overlays, the mortgage loan underwriter will issue a conditional mortgage loan approval.

  • A conditional mortgage loan approval is when the mortgage loan underwriter decides that he or she will issue a clear to close once the mortgage loan borrower can meet all the mortgage conditions that is listed on the conditional mortgage loan approval.
  • The mortgage processor gets assigned to the mortgage file again and it is the job of the mortgage loan processor to quarterback the mortgage file with the mortgage loan originator and the mortgage borrower.
  • Once the mortgage conditions has been met, the mortgage underwriter then issues a clear to close which means that the mortgage company is ready to send out mortgage documents to the title company as well as fund the mortgage loan.

Mortgage underwriters need to follow rules and regulations. Many mortgage loan borrowers think that depending on the mood of the mortgage underwriter, they can approve or deny the mortgage loan applicant. That is not the case. Mortgage underwriters need to be super careful not to make any mistakes when underwriting a mortgage borrower and make sure that the borrower meets all of the mortgage lending guidelines on the particular mortgage loan program as well as their investor mortgage lending overlays.

Mortgage Underwriting At CrossCountry Mortgage NMLS 3029

CrossCountry Mortgage NMLS 3029 is a national mortgage banking firm headquartered in Brecksville, Ohio and licensed in 50 states. CrossCountry Mortgage has no overlays on the following:

  • No Overlays On VA Loans with the exception of requiring a 580 FICO Credit Score
  • No Overlays On FHA Loans
  • No Overlays On USDA Loans
  • No Overlays On Fannie Mae and Freddie Mac Conventional Loans
  • Closings in 21 days or less on complete files
  • Over 75% of the borrowers at The Gustan Cho Team at CrossCountry Mortgage Inc. NMLS 3029 are folks who either got a last minute mortgage loan denial or are stressing over the mortgage process. We take them over and close their home loans in record time.
  • There is no stress during the mortgage process with The Gustan Cho Team at CrossCountry Mortgage.

If you need a lender with no overlays or are going through a stressful mortgage process with your current lender, give Gustan Cho NMLS 873293 at CrossCountry Mortgage NMLS 3029 a call at 262-878-1965 or text Gustan Cho on his cell at 262-716-8151 for faster response. You can email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays to take your mortgage inquiry and answer any questions you may have.

 

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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