Inside the Underwriting Process | UnitedOne Credit Union

Behind the Scenes of the Underwriting Process
Authored By: UnitedOne Credit Union on 7/3/2024

Buying a home is one of the biggest purchases you’ll make in your life.

The meticulous underwriting process involved with securing a mortgage ultimately helps ensure the big decision you are about to make is the right one for you.

The Local Home Loan Experts at UnitedOne Credit Union take you behind the scenes of the underwriting process and explain its importance in the latest edition of their podcast, At Home on the Lakeshore.

By definition, underwriting is the process of taking on financial risks for a fee such as loans, insurance, or securities.

Specifically for home loans, underwriters ensure responsible lending practices while safeguarding the interests of both the borrower and the lender.

“Underwriters are the backup,” said UnitedOne Mortgage Specialist Julie Peot, NMLS # 441412. “They are a second set of eyes that look through all of the documentation.”

Initially, the underwriter evaluates the borrower's financial profile. This includes scrutinizing credit history, income stability, employment status, and debt-to-income ratio.

Simultaneously, the underwriter examines the property's appraisal to confirm its market value and condition. This ensures the loan amount aligns with the property's worth and that the asset serves as adequate collateral.

“They’re going to make sure that you’re getting a house that is not in need of major repairs or things like that,” said UnitedOne Mortgage Specialist Kari Johnsrud, NMLS # 441414. “If the appraiser notes that there are things that need to be fixed or addressed, that could be one of your underwriting conditions. They’re trying to make sure you get into a house that it is sound.”

Throughout the underwriting process, documentation plays a pivotal role. The borrower must provide various documents such as tax returns, pay stubs, statements, and proof of assets. These documents verify financial stability and provide a comprehensive overview of the borrower's financial health.

Once all documentation and assessments are complete, the underwriter makes a decision. This decision can result in approval, denial, or conditional approval pending further documentation or clarification.

The time it takes to go through the rigorous underwriting process also allows you as the borrower to review your financial situation and ensure it’s a viable situation for you.

“It gives you time to process what you’re doing,” said UnitedOne Mortgage Specialist Linda Serrano, NMLS # 441416. “Is this the right fit? Am I truly able to finance this home? Can I truly make the new payment? We give you the time to process all of that information.”

Overall, underwriters aim to minimize financial risks associated with mortgage lending, thereby facilitating secure and sustainable homeownership.

Whether you’re looking to buy your first home or tap into the equity of your current house to do a renovation, UnitedOne’s team of Local Home Loan Experts are your trusted source in Manitowoc and Sheboygan for all your home loan needs.