What Is Mortgage Underwriting?
July 15, 2022
July 15, 2022
Sound underwriting helps ensure that you qualify for a mortgage loan that you can afford to repay. We explain more about what underwriting is and the underwriting process so that you understand how your loan application will be evaluated.
Underwriting is the process of verifying information about your employment, income, assets, debts and credit history to determine if you can afford to pay back the mortgage loan you are applying for. Underwriters also verify that the size of the mortgage you're applying for is reasonable compared to the value of the property you're buying or refinancing.
Sound underwriting gives lenders the confidence to make mortgage money available to people who want to buy or refinance a home.
The underwriting process is basically divided into three parts.
Your lender, or your lender's loan officer, collects and verifies your personal information, from your employment history to your outstanding debts.
You'll be asked to give your lender permission to independently verify your information and obtain copies of your credit history.
Here's a short list of the information needed to begin underwriting your mortgage.
The appraised value of the property is another critical factor for determining how much you can borrow. Your lender will have the property you hope to buy professionally appraised to assess its physical condition, the condition of the surrounding site and neighborhood, and its value.
Finally, the underwriter reviews all of your information, either manually or with the help of an automated underwriting system, such as Freddie Mac's Loan Product Advisor®, to determine:
To learn more about the mortgage process, including finding the right loan, the 4 C’s of qualifying for a mortgage, and what to do if you’re mortgage application is denied, visit My Home by Freddie Mac®.