What is an underwriter in real estate?

Written by Anytime EstimateFebruary 9th, 20223 minute read

Approved loan application

An underwriter evaluates loan applications from home purchasers, homeowners, and real estate investors. Consider the underwriter as the bank or mortgage company's umpire. He or she ascertains the mortgage applicant's financial risk and the property's suitability as collateral for the loan. The underwriter is the one who decides whether to accept or deny a mortgage application.

The underwriter checks the property information included in the appraisal. After that, the underwriter examines the borrower's income, assets, and debt to determine whether the application fits the lending criteria.

Historically, all real estate applications were reviewed only by an underwriter; but, in the 1990's, computer software started evaluating mortgage applications.

As the term "automated underwriting" implies, the loan application is evaluated by an interface with either the Federal National Mortgage Association or the Federal Home Loan Corporation's computer. Automated underwriting reduces the time required for the underwriting procedure. Read more about automated underwriting.

Mortgage Underwriting Frequently Asked Questions

Q. Are underwriters permitted to make exceptions?
A. While most underwriters are permitted to make exceptions, if the loan defaults, the underwriter may find himself or herself in hot water.

Q. Is it possible to swap lenders throughout the underwriting process?
A. You may transfer lenders at any point throughout the loan process. However, bear in mind that you will be beginning over with the new lender.

Q. Do lenders do post-closing employment verification?
A. Generally, no.

Q. Do mortgage firms do post-closing credit checks?
A. Generally, no.

Q. Do mortgage firms do post-closing employment verification?
A. Unlikely.

Q. Are underwriters motivated by a desire to approve loans?
A. Underwriters want loan approval; after all, approved loans result in a profit for the company, which results in ongoing employment.

Q. Are underwriters available on weekends and holidays?
A. During periods of high volume, underwriters will report to work on weekends.

Q. Is the appraisal performed prior to underwriting?
A. Yes.

Q. How can I determine if my mortgage application will be approved?
A. Request from the loan officer that your application be submitted through the automated underwriting system.

Q. How do mortgage lenders validate an applicant's income?
A. Lenders will send letters verifying employment to employers.

Q. How do underwriters find judgements?
A. Judgments may be seen on a prospective borrower's credit record.

Q. How do you find out when your mortgage loan application has been approved?
A. The mortgage firm will send you a letter of approval.

Q. How long does an underwriter typically take to approve a mortgage?
A. An underwriter will spend about one hour fully reviewing a loan application. However, the time duration may vary depending on the application's overall condition. A loan application will be stopped (put on hold) if any papers are missing from the file.

Q. How long does it take for a home loan to be underwritten?
A. Underwriters typically take between half an hour and an hour to examine a loan application. However, the loan application may be delayed due to a backlog of other applications awaiting approval.

Q. What are the terms of a mortgage loan?
A. Prior to loan approval, underwriters often seek more information from the applicant or appraiser. The loan is accepted subject to the loan terms being met.