4 key steps in the Mortgage Underwriting Process

[Joseph Scorese]

4 key steps in the Mortgage Underwriting Process

This past week, I personally Underwrote and funding a Private Mortgage on behalf of an Investor for a Construction Loan. The experience was fast past and exciting. The opportunity to have a trust created by another putting their money to work on real estate financing and bearing them a fantastic return and points was fulfilling. (12% Interest and 3 Points)

When underwriting any file the same basics stick for an evaluation of the borrower. Also, working with a knowledgeable Attorney is necessary for the proper documentation to put in place.

Between loan approval and closing, your lender is doing a lot of work behind the scenes in a process called underwriting. Here are five things the lender does during underwriting.

Underwriting Financial & Credit Verification
Verification of the information on their application and supporting documents. The amount of verification involved depends on how risky I perceive it to be. Credit and Financials are Key!

Completed Value Appraisal
I want to make sure that the price of the property the investors is buying is comparable to the values of similar properties. Ordering an independent appraisal of the property prior to closing, and the results could affect the rate and terms of your mortgage. A licensed appraiser will provide an expert's estimated value based on a physical inspection and comparable, or "comps" -- prices paid for comparable properties that have recently sold in the neighborhood. An appraisal typically costs between $300 and $500.

Title search and title insurance
After the appraiser has looked at the physical side of your house, working with a Class A Title Company looks at its legal history. Before I lend the money against a house I want to make sure that there are no claims on it. That's why a title company performs a title search.