Underwriter reviewing a loan application

What Is A Mortgage Underwriter?

A mortgage underwriter is an employee of a mortgage company that reviews your loan application and decides if you meet the company’s lending requirements. If you do meet their requirements, the underwriter will issue an approval. If you do not meet the company’s requirements, the underwriter will turn down the loan application and advise why the application is being denied.

What Does An Underwriter Do?

An underwriter completes the following tasks while reviewing your loan application.

  • Examines your loan application
  • Verify’s your credit score and payment history
  • Reads all supporting documentation, including;
    • Income
    • Asset
    • Title and escrow documentation
    • Appraisal report
    • Inspection report (if one is required)
    • HOA Certification report (if the home has an HOA)
  • Calculates your debt-to-income ratio
  • Verifies employment (or self-employment)
  • Calculates your loan-to-value ratio
  • Reviews loan program guidelines and ensures your application meets the lender’s requirements

How Long Does Underwriting Take?

Most underwriters spend three to six hours reviewing a loan application before they issue their initial approval. The initial approval will have a list of conditions you must satisfy before the underwriter gives a final approval.

Does this mean you will have an answer within three to six hours once your loan officer submits the file to underwriting? No. Before the file goes to the underwriter, a processor reviews the file to ensure all necessary documentation is in the file. Also, there are other homeowners who are also in line to have their files reviewed.

When a lender’s loan application volume is “moderate,” most mortgage lenders will have your file reviewed by an underwriter within three to five days. If the application volume is “heavy,” it might be five to ten days before an underwriter reviews your file.

During periods with little to almost no loan application volume, a mortgage lender might be able to have the underwriter review your file within twenty-four to forty-eight hours.

Do You Meet With The Underwriter?

Never. Your interaction with the mortgage company is limited to the loan officer or the loan processor. In nearly twenty years of working in the mortgage industry, I’ve never had a client meet with an underwriter.

What Do Underwriters Look For?

When an underwriter reviews a loan application and the supporting documentation submitted by the homeowner, they are looking to see if you meet the requirements of the loan program.

There are many different types of loan programs; here is a list of the most common loan programs.

Underwriters look for a solid credit score, payment history, an acceptable loan-to-value ratio, a debt-to-income ratio that is below underwriting requirements, and proof you have the ability to repay the loan.

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Here Is What A Mortgage Underwriter Can’t Do

A mortgage underwriter is responsible for ensuring all qualified mortgage applicants meet company requirements for lending. A mortgage underwriter can’t deny a loan application for the following reasons;

  • Race
  • Color
  • Ethnicity
  • Religion
  • Sex
  • Sexual Orientation
  • Gender Identity
  • Age (provided you are above 18)
  • Familia Status

A mortgage underwriter can’t turn down your application if they don’t like your name or the neighborhood of your current address (or the neighborhood of the home you are buying). An underwriter has to follow the numbers, and if the numbers work, then the underwriter must approve the loan.

What Should I Not Do During Underwriting?

Here is a list of things you should not do during underwriting.

  • Apply for credit with another company
  • Quit your job or change jobs
  • Start a home renovation project
  • But another home unless you’ve cleared it with your loan officer
  • File for divorce
  • File for bankruptcy
  • Switch from a W-2 employee to a 1099 employee

You want to ensure your financial picture and outlook is the same at the beginning, middle, and end of the underwriting process. Any adjustments to that might negatively impact your loan application.

If You Get Turned Down By An Underwriter, Can You Re-Apply?

Yes! If you apply for a mortgage and the underwriter turns down your loan application, you can re-apply later. This is what you should do before you re-apply.

  • Review the reasons why the underwriter turned down your loan application
  • Discuss with your loan officer the reasons why the underwriter denied your loan application
  • Set up a strategy to correct and improve the areas that were an issue for the underwriter

For example, let’s say your underwriter turned down your loan application because your debt-to-income ratio was too high for the loan program you applied for. Possible solutions are as follows.

  • Look at alternative loan programs that allow for a higher debt-to-income ratio
  • Pay off or reduce your credit card, car loan, or any other debt to lower your monthly debt payment
  • If you are buying a home, increase your down payment
  • Obtain a non-occupying co-borrower
  • Find a higher-paying job

Once you have resolved the issue, contact your loan officer so that you can re-apply.

Is A Loan Officer An Underwriter?

No, a loan officer is not an underwriter. They are two different positions within a mortgage company. A loan officer is a licensed employee who works directly with consumers to help them prepare for the loan process. Loan officers are typically referred to as “Mortgage Loan Originators.” A loan officer can not issue a loan approval; only an underwriter can issue a loan approval.

Underwriting Tips From An Industry Pro

Based on my nearly twenty years in the mortgage industry, here are some key tips for homeowners who are about to apply for a mortgage.

Make Sure Your Loan Officer Knows What They’re Doing

It seems obvious, but unfortunately, many loan officers don’t know what they are doing and are solely focused on selling the homeowner a specific loan product. If your loan officer is more “salesman” than anything else, that might be a good sign to look elsewhere.

Here are some additional suggestions:

  • Only work with a loan officer if they have at least five years of experience
  • Check out their online reviews
  • Visit the NMLS website to verify their license and job history
  • If a loan officer is jumping from one company to the next every year, find a new loan officer
  • If the company they work for does not have an “A-” or higher rating with the Better Business Bureau, then find a different loan officer

Doing some homework to find the best loan officer will pay huge dividends during your loan process.

Submit Clear And Complete Documents

Make the underwriter’s job easier by submitting documentation that is clear and easy to read. If an underwriter can’t read your documentation, they can’t approve the loan.

And when it comes to the documents you need to send in, ensure you send everything. Don’t leave out page two of your four-page bank statement. If you are sending in tax returns because you are self-employed, make sure you send the entire return, not just a few pages.

Lastly, make sure the entire document is on the page. So if you are scanning your pay stub, ensure the entire one is on the page. Ensure no corners or sides are missing from the page.

Be Honest

You are wasting your time if you are not being honest about your financial situation with an underwriter. In the modern era of underwriting, mortgage companies have many tools to ensure the accuracy of a loan application; it’s almost impossible to obtain a mortgage on fraudulent terms.

Do You have a question or need a quote?

Contact Kevin

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The Bottom Line About Mortgage Underwriters

One of the most important people in the mortgage process is your underwriter. They are the ones who review your file and decide if you are qualified to obtain a mortgage. They will review everything and double-check for accuracy. So make their job easier and provide all the requested documentation in a timely manner. And make sure it’s complete and easy to read.

Loan Officer Kevin O'Connor

About The Author

Loan Officer Kevin O'Connor has over 17 years of experience as a Mortgage Loan Originator and is a trusted resource for mortgage education and information. He's the content creator of K.O. Home Loan Solutions and is licensed by the state of California and the Nationwide Mortgage Licensing System. He has a top rating with the Better Business Bureau, Google, Yelp, and Zillow. You can contact him at 1-800-550-5538. CA DRE #01499872 / NMLS #247447