What is mortgage underwriting?

by Ryan Christensen 06/12/2024

What is mortgage underwriting featured image

For most homebuyers, securing financing through a mortgage loan is the best option to purchase a property. Getting an overall idea of the mortgage underwriting process can help you when working with a mortgage lender and can help you prepare for each step of the journey. 

What is mortgage underwriting?

After you send in a mortgage loan application, it goes through the underwriting process. Your lender reviews key pieces of information to determine if you’re financially able to pay them back for the loan. 

A mortgage underwriter reviews your credit score, credit history, employment information and assesses the mortgage loan amount to see if it’s worth the investment for the lending company. 

Tell me the steps of the mortgage underwriting process

There are 5 main steps to the mortgage underwriting process. Theses include: 

  • Getting your loan application preapproved. 
  • Verification of your assets and income. 
  • Appraisal for qualification. 
  • Verification of no titles on the property and title insurance. 
  • Final decision to approve or deny the mortgage application. 

How strict is mortgage underwriting?

Overall, an average of 7 to 14 percent of mortgage applications are denied yearly. Most lenders abide by Fannie Mae and Freddie Mac guidelines during the lending process. Government backed loans such as an FHA or VA loan adhere to regulations of the Federal Housing Administration.

Sometimes, lenders will implement their own regulations on top of the standard ones in response to economic factors or other conditions, which is called an overlay. 

Getting approved or a loan gives homebuyers more freedom when making a property purchase. By reviewing the underwriting process, you can prepare needed documentation and get a better idea of the timeline for approval.

About the Author

Ryan Christensen

Responsive, Responsible and Resourceful - How Real Estate Should Be. This is the foundation of our continued success: responsive service, providing accurate and timely information, and demystifying the process. 100% of my business is referral based because I listen to my clients' needs and exceed their expectations. As a full-time real estate broker, I am the best advocate for both my buyers and sellers. I am always available, regardless of the time of day.

 Being a native Southern Californian is a tremendous advantage. I know the area. Time is more valuable than money, but neither can be wasted. And, I'm a fan of hard work. My clients can enjoy their home buying and/or selling experience because I provide a trusting, focused, straightforward approach. I look forward to helping you achieve your goals and find joy in homeownership.

 I am both a licensed Real Estate and Mortgage Broker. Others choose to concentrate on one or the other. I provide a higher level of service and expertise than those who do not obtain this dual skill set, which differentiates me from other service providers. My decisions and advice are based solely on what is in the best interest of my clients. I use Real Estate Sales as a tool to make sure my clients get the home that meets or exceeds their needs. As a Mortgage Broker, I search for the best loans so I can offer lower rates and pricing than my financing competition. This certainly IS in the client's best interest.