Underwriters Role

Underwriters Role And Job In The Home Loan Process Leading To A CTC

Gustan Cho Associates are mortgage brokers licensed in 48 states

This article covers Underwriters Role And Job In The Home Loan Process Leading To A CTC

Mortgage Underwriters Role In The Home Loan Process Leading To A Clear To Close:

  • The history of underwriting goes a long way back
  • Many people think of underwriters as the big bad wolf
  • However, they are just doing their job
  • Defined by the United States Department of Housing and Urban Development (HUD), underwriting is the process of analyzing a home loan application to determine the risk involved in making the loan
  • The underwriter must review the potential of the borrower’s credit history and a judgment of the property value to determine their decision
  • Underwriters are there to protect a borrower from buying a house they cannot afford, and they are there to protect the lender to make sure all guidelines are being followed
  • Detail the duties of an underwriter during the loan process

Understanding Mortgage Underwriters Role In The Mortgage Process

We are writing this article, so our readers get a better understanding of the daily Underwriters Role.

  • Underwriters wear many hats in the mortgage industry
  • Ask any underwriter, they will tell you that they do a lot more than simply underwrite your loan
  • We will now detail the underwriting process for your mortgage loan

After you complete your application and receive a preapproval letter from your loan officer, you will then begin shopping for a home.

  • You will submit a contract to the sellers going over the specific purchase agreement
  • This contract will include the purchase price, seller credits, and closing date

Once you have an executed contract, your loan officer will have disclosures sent to you.

Importance Of Mortgage Disclosures

These loan disclosures include a few key pages such as the loan estimate, notice of intent to proceed, and an appraisal credit card authorization form.

  • Once the lender has your full mortgage application returned, they will begin your loan file
  • At this time, you were loan processor will order the title report, appraisal, and any third-party verifications
  • While the lender is waiting for the appraiser to schedule an inspection, the processor will send the loan off to the underwriter
  • It is the processors’ responsibility to make sure all supporting documentation is in the file

They have a checklist to make sure all W-2s, paystubs, bank statements, and income cases tax returns are in the file for the organized underwriter.

Mortgage Underwriters Role And Task In Underwriting A File

What are the underwriter’s main tasks in the mortgage process?

  • Once the underwriter gets the file, it is their responsibility to make sure that the borrower truly qualifies for the mortgage product
  • The underwriter must verify income, assets, employment, credit report, and appraisal

Underwriters Role In Determining Qualified Income


  • The underwriter will go through and complete income calculations based on pay stubs, W-2’s or 1099’s, and tax returns in the file
  • From here they will determine if the debt to income ratio qualifies
  • Debt to income ratio is one of the main pillars of qualifying for a mortgage

Please see our blog on DEBT TO INCOME for more information.

Underwriters Role In Analyzing And Reviewing Credit Reports


  • It seems obvious the underwriter must analyze the borrower’s credit report when qualifying for a mortgage. They are looking for much more than just the CREDIT SCORE
  • The underwriter must evaluate the payment history shown on the credit report
  • They need to verify the borrower’s past history of paying bills on time

They will also analyze derogatory information such as bankruptcies, foreclosures, collections, and charged-off accounts

Underwriters Role In Determining Qualified Assets


  • The underwriter will also verify all down payment funds are seasons and available for use for the down payment
  • If there are gift funds involved, they will confirm that it is in an acceptable donor

Proper documentation such as all pages of bank statements must be included in the loan file.

Underwriters Role In Verifying Employment And Stable Income


  • The underwriter must analyze the strength of employment
  • The length in term of employment and status of employment will be used to determine whether the income is eligible for the loan
  • For example, if you have a part-time job, you must have a two-year history of working a part-time job to include the income
  • If you receive bonus and or commission income, you must also have a two-year history of receiving such an income

The underwriter will then take a 24-month average to calculate your qualifying income.

Underwriting The Subject Property


  • The underwriter must approve of the appraisal and title report before issuing a clear to close
  • It is the underwriter’s responsibility to analyze the appraisal report and make sure the value is supported
  • A lender may only lend on the lower amount of the purchase price or appraised value

The underwriter must also verify there are no additional liens on the title report that need to be addressed before closing.

We hope this article gives you some insight into the day-to-day operations for an underwriter.

  • We do understand why underwriters get a bad rap, but they are held to high regulatory standards
  • Since the real estate crash of 2008, mortgage guidelines are very black and white
  • We encourage you to reach out directly to us with any questions regarding underwriting
  • Please contact us at Gustan Cho Associates at 800-900-8569 or email us at gcho@gustancho.com with  any questions
  • Gustan Cho Associates are experts in all mortgage financing
  • We currently offer mortgages without LENDER OVERLAYS in multiple states (more states are being added) and we have referral partners covering most of the United States!

We are available seven days a week and even on holidays. We look forward to helping you with your mortgage financing.