What is mortgage underwriting?

by Ann Hayward 12/25/2023

What is mortgage underwriting featured image

For most homebuyers, securing financing through a mortgage loan is the best option to purchase a property. Getting an overall idea of the mortgage underwriting process can help you when working with a mortgage lender and can help you prepare for each step of the journey. 

What is mortgage underwriting?

After you send in a mortgage loan application, it goes through the underwriting process. Your lender reviews key pieces of information to determine if you’re financially able to pay them back for the loan. 

A mortgage underwriter reviews your credit score, credit history, employment information and assesses the mortgage loan amount to see if it’s worth the investment for the lending company. 

Tell me the steps of the mortgage underwriting process

There are 5 main steps to the mortgage underwriting process. Theses include: 

  • Getting your loan application preapproved. 
  • Verification of your assets and income. 
  • Appraisal for qualification. 
  • Verification of no titles on the property and title insurance. 
  • Final decision to approve or deny the mortgage application. 

How strict is mortgage underwriting?

Overall, an average of 7 to 14 percent of mortgage applications are denied yearly. Most lenders abide by Fannie Mae and Freddie Mac guidelines during the lending process. Government backed loans such as an FHA or VA loan adhere to regulations of the Federal Housing Administration.

Sometimes, lenders will implement their own regulations on top of the standard ones in response to economic factors or other conditions, which is called an overlay. 

Getting approved or a loan gives homebuyers more freedom when making a property purchase. By reviewing the underwriting process, you can prepare needed documentation and get a better idea of the timeline for approval.



About the Author
Author

Ann Hayward

Born in Philadelphia and raised in the suburbs, Ann Hayward got her Pennsylvania real estate license at age 18 even before going to college. This second-generation real estate professional followed in the footsteps of her father and two uncles, inheriting their passion for the business. Licensed in DC, Maryland and Virginia, Ann is accomplished in her career, with numerous designations including SFR, SRES, PSA, WHC, and multiunit Housing Development Finance Professional (HDFP) from the National Development Council. She specializes in Prince Georges and Montgomery Counties, Northern Virginia and Washington, DC, all jurisdictions where Ann has lived and knows very well. In addition to her professional expertise, she owns and manages personal investment property, understands and has been involved in the renovation/remodeling process, and has great resources which she shares with clients. When you hire Ann to represent you, she will make your buying or selling experience an enjoyable, rewarding one. Her compassion, sensitivity to her clients’ needs, eye for detail, and ability to see the big picture when guiding you through a purchase or sale are unique assets that will ensure your success. A diverse and relevant background also gives Ann a distinct edge. For 30 years, she worked in fast-paced, high-pressure television and theatrical production, attaining the highest achievement – DGA membership as a Director, and as an award-winning staff and freelance writer. Her keen audio visual skills and design sense benefit sellers in marketing their properties, and are invaluable in helping buyers see the potential of space. A true renaissance woman, Ann was also an income tax professional and office manager for H&R Block, so she thoroughly understands the tax and financial implications of acquiring and selling real estate. Her superior organizational skills are further evidenced as owner of a downsizing/professional organizing business, Managed For You, which allows her to connect with everyone from millennials to boomers and seniors, whether for small space planning or assisting with major decluttering and transitioning. Ann holds an AB in American History from Simmons College, Boston, plus attended Robert Wagner Graduate School of Public Administration where she was a candidate for Doctorate. She additionally studied Film Direction at the American Film Institute in LA, and was a Stanford University post-graduate Professional Journalism Fellow. Personally, Ann is an avid if not very good golfer, and the co-founder of a nonprofit 501c3 organization offering educational guidance, tutoring and counseling for youngsters from elementary school through college admission. She sits on the board of trustees of a nonprofit educational film production corporation as well. (202) 494-6252 [email protected]