Key steps to understand mortgage underwriting

Mortgage underwriting can feel mysterious – maybe you’ve heard it’s a long and complicated process or that it’s full of stops and starts. But that shouldn’t give you cause to worry.

We’ll help you understand everything about mortgage underwriting, including how you can prepare to be ready for every step of the process.

Mortgage underwriting is the process to assess whether you meet specific requirements for the loan you’ve requested. The process involves a thorough review of your credit, employment history, income, assets, and property details by a mortgage underwriter.

There are four key focuses to the underwriting process: credit, income, assets, and property.

• Credit: Underwriters will review your credit history to understand your past borrowing and payment history.
• Income and employment: Underwriters review your employment history and income documentation to assess your ability to repay the loan.
• Assets: Underwriters review assets, such as your bank and investment accounts, to understand whether you have the funds available for down payment and closing costs.
• Property: Finally, underwriters will review an appraisal, if necessary, of the property to determine whether the property value supports the purchase price and requested loan amount.

Underwriters will typically ask you to provide the following documents as applicable to your application:

• W-2 and 1099 forms from the past two years
• Pay stubs from your current employer
• Social security award letters or other retirement income documentation 
• Recent bank statements, investment accounts, or other assets used for your transaction
• Leave and earning statements (military income)
• Federal income tax returns for self-employed borrowers
• In some cases, federal income tax returns may be needed to document self-employed or rental income

 Based on their review, an underwriter may ask for additional documentation, information or explanation about your credit, income, or employment history.

As you begin, your home mortgage consultant will be with you to help guide you through the underwriting process. Once your documents have been received and acknowledged, you’ll be assigned a home loan processor who will help complete the process.

Timeframe: The initial review generally takes about three business days to complete, but that timeframe could change depending on each borrower’s unique situation. During that time, if an appraisal is required, it will be ordered, and your underwriter will begin reviewing your documents. They will also work with the title company and verify your employment.

Additional documents: Your home loan processor or mortgage consultant will circle back with you to discuss whether additional documentation is needed. Once they have all the documents needed to conditionally approve your loan, your loan processor will keep it moving toward the closing stage.

Final steps: Once your loan is ready for closing (signing your final loan documents), your loan processor will walk you through the next steps of connecting you with a closing agent. Closing your loan in a timely manner is extremely important, so be mindful of providing requested items within 48 hours to keep the process moving and to avoid delays. Learn more about what is expected at closing.

Are you ready for the next step in your homebuying journey? Talk with your mortgage consultant if you have questions or concerns. You can also check out our Learning Center to help you make more confident decisions throughout the homebuying process.