Understanding the Mortgage Underwriting Process

Posted by Steph Kaye on Wednesday, September 27th, 2017 at 12:07pm.

Welcome to Wednesday, this one is for the newbies. If you’re new to the home buying process there are a few critical steps with which you should become familiarized. Aside from creating a great relationship with you realtor, your trusted source in this complex game there are other players who will play important factors into your mortgage underwriting process.

The categories to know are: Verification,  Appraisal, Title Search & Title Insurance, Flood Certification, and Survey.

Verification: After the crisis of 2008 there are stricter rules in place for verifying documentation for the mortgage company. In addition to supplying documentation about where you work, your employer is usually called to find out what you are paid. If you’re self-employed, you might find yourself having a bit of a tougher time – only because more documentation will be required to justify the mortgage.

Appraisal: Using costing about $300 – 500, an appraiser will verify comparable (or “comps) properties in order to gain an understanding of the true cost of your house or what the market might bear. Lender’s higher an independent appraiser to “provide an expert’s estimated value based on physical inspection & comps.” Comps are the price paid for similar properties in your neighborhood.

Title Search & Title Insurance: A title company handles the legal side of the deal. They don’t want to lend to a house that has any liens, easement rights, zoning ordinances or claims on it. The title insurer then issues a policy confirming that all data is correct and accurate. Lenders require a title policy, however, sometimes the property owner is issued one too.

Flood Certification: Flood insurance is not part of a standard certification unless you do live in a flood zone. If you do you will be required to purchase flood insurance. If you’re not sure if you live in a flood zone you can find out at www.floodsmart.gov. We recommend you do this before starting your search for a new home.

Survey: Not all, but some lenders require that a home property’s boundaries be inspected by a professional surveyor.

With all that is said and done, home buying is a complex, lengthy process that can cause undue stress. Naturally anxiety is ok! But you can help yourself feel less out of control by following some tips below.

o        Provide complete documentation with your application.

o        Respond promptly to your lender’s request for more information.

o        Call your lender and real estate agent to check on your loan application status.

o        Help contact employers and others who may need to provide documentation.

o        Keep records of your conversations with your lender.

 Hopefully we have provided some good insight into what you can do to make the course of action that much smoother for yourself and family. The goal is to sell that house and get into your dream one and with that we wish you the best of luck! 

photo credit: 

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