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Real Estate Underwriting

Updated on June 4, 2013

The process of real estate underwriting is often misunderstood. The underwriter is just as vital a part to closing on your home as is the loan officer. Looking for a mortgage can be an arduous progression of mind numbing visits to banks to see about finding the best mortgage terms and interest rates.

Any good real estate agent worth anything at all will normally ask if you have an approval letter before they start showing you homes. The reason for this is that if they spend hours and hours helping you find your dream home and then you cannot secure financing, they have essentially wasted their time. Obtaining pre-approval is the fastest way to set out on your home shopping adventure.

Other than pre-approval, you might obtain what is called pre-qualification. The difference between these two terms is that if you are pre-qualified it typically means a loan officer has offered his or her opinion that the person is worthy of obtaining a loan. Most of the information can be taken verbally and perhaps a credit report will be reviewed. This is not as secure as pre-approval, which means the potential borrower has gone through the entire loan process and all of the documents have been approved.

When someone decides to buy a home there are always certain steps that cannot be avoided. One of those steps is getting pre-approved for financing because most people can’t buy a home without a loan. There are specific things you have to do in order to secure financing for your home.

After the assumed loan is approved, the borrower shops for a home. When a home is selected, the buyer goes back to the bank with all of the information and the loan then starts the underwriting process. The underwriting process is where all of your documents you submitted to your loan officer are verified. Your bank information and your pay stubs, investment info and references, and more. You will need at least 30 days worth of original pay stubs. Two years of W-2 forms are additional helpful information if you have them. If you are self-employed, prepare to show two years worth of tax returns.

All assets must be accounted for and documented. If you have 401k accounts or mutual funds or stocks and bonds, you should gather. At least two forms of identification will be required. A driver's license and passport or some other government issued id is perfect as they have pictures. Your social security card is another form of id you can use.

The underwriter will work to verify all of your documents and declarations by calling your employer, your landlords, and even your bank. An underwriter may take everything the loan officer gave them and be happy with it or they may ask for even more documentation. They can also ask the potential borrower more questions to ascertain the truth of the financial situation to their satisfaction.

If the underwriter does decide to deny the loan, they must provide a valid reason. They are not allowed to discriminate, but they can use their discretion when pre-approving the loan.

Denver Real Estate


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