What is a Loan Underwriter Anyway?
When you first apply for a loan and the information on the loan application has been validated the loan is ready to be underwritten. The underwriter can be a company or a person. The loan underwriter has the responsibility for issuing a mortgage and analyzes your creditworthiness and set the loan amount. If the underwriter is not completely satisfied they will request more documentation that they feel is justified to help the file become more complete.
The loan underwriter carries the final responsibility of making sure that the mortgage company is protected from any probability of default which could lead to foreclosure. Not only does a loan underwriter have the responsibility of being aware of all the underwriting guidelines put also all the policies and procedures.
Determining the borrower's monthly income is one of the most important components. The borrower's income can come from several different sources, but it has to be supported by sound documentation that shows the likelihood of continuation. If the borrower is self-employed the underwriter will average the last two years from the borrower's federal tax returns. The underwriter will also want the year-to-date earnings from your profit and loss statement.
After the underwriter is completely satisfied with their finding, you will receive your approval. At this time you are clear to close and the closing will be scheduled. One thing you must remember is your credit will be checked again by running a credit report to make sure that you have not incurred any new debt that could affect your loan qualifications. You could be thinking that everything is fine and you are on your way to closing and you find out that your loan has been cancelled and there will be no closing.
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Added: June 12, 2008
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