Prepare your loan application for the underwriter

When applying for a home loan it is important to prepare your file for what an underwriter will look at. Many borrowers are not aware of what they look for and how they think.

It is simple really. Contrary to what many borrowers think, an underwriter’s job is to find a way to DENY the file. They will scrutinize all the qualifying aspects of the file to determine if something doesn’t add up. This is especially true of stated income files. The underwriter’s job is to make sure the lender does not get stuck with a loan that really does not qualify for the program applied for.

As a result you should always prepare your application with the understanding that each qualifying category will be scrutinized. This means if there is a late payment on your credit report you should prepare a written explanation of the event. If there is a change in employment you should be prepared to validate that there were no job gaps. If you are self employed you should have a CPA letter or business license proving that you have been self employed for at least 2 years. For those who own investment properties make sure to gather leases for the tenants and expense reports as well as mortgage and insurance information for those properties.

Appraisals are being scrutinized with extreme diligence right now. This is because of the market decline and the possibility that an appraiser used comps that can be contested. Appraisals have room for interpretation and many lenders will request an appraisal review if the value you claim is above the median price for homes in that area.

The more information you provide in advance the more time you will save and the less likely you will be to have your loan denied.

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