A starter guide to mortgage underwriting

by Jolene Selwa 11/20/2023

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

Jolene Selwa

I am an expert real estate agent with Crescent Realty in Myrtle Beach, SC. I provide buyers and sellers with professional, responsive, and attentive real estate services. Having lived and worked within this great community since 2004, I have a comprehensive understanding of our real estate market and would be honored to be your agent. If you are looking for an agent who will listen to your needs and find your dream home or commercial property or get you the best price on the sale, I am, your agent. Give me a call! I'm motivated and eager to provide you the most rewarding real estate experience possible.