When you initially start viewing homes for sale, your agent will probably require that you get preapproved for a home loan before you start. Getting preapproved for a home loan makes you a qualified buyer but does not guarantee that you will get a loan. Your loan must go through an underwriting process before you can get the loan. Understanding what this means is vital when getting a home loan, and here are three things you should know about it.
1. The Main Responsibilities of the Underwriting Department
Underwriting is a department that all mortgage lenders use, and this department has three primary responsibilities:
- To verify that all the information is correct.
- To assess the risk level of a borrower.
- To determine if the lender should offer the loan.
Your ability to get a mortgage relies on the underwriters that handle your file. They use various tools to complete their jobs and duties, and the decision is left in their hands.
2. The Things that Underwriters Check
The underwriting department goes through various steps when they receive a loan application, and they meticulously complete each one. They might begin by verifying your income and job. They do this to ensure that you have the financial means to repay your loan. The next step might be to examine your finances. They will look closely at your credit score and report. They will need to know what money you owe and where you stand financially. Evaluating these things helps them determine your risk level and whether the lender should approve the loan. Finally, they verify other details of the home purchase to ensure that you meet all the guidelines of the loan program you are using.
3. The Effects that Underwriting Has on Your Home Loan
The underwriting department's work can affect your ability to get a loan. If everything checks out, they will approve the loan. If they have questions about things, they might ask you for further documentation. If your information does not meet the guidelines, they might deny the loan. Getting your case approved by underwriting is vital for proceeding with your home purchase.
When you buy a house with a home loan, your file will go to underwriting. Many people feel intimidated by this process even though it is a standard part of every home loan. If you have questions about this process, talk to a home loan lender today. For more information about a home mortgage, contact a local bank or lender.