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The Mortgage Underwriting Process Explained - Quicken Loans Zing Blog

As of June 25, 2018, we’ve made some changes to the way our mortgage approvals work. You can read more about our Power Buyer ProcessTM.

If you are in the market for a mortgage, you may soon encounter what many mortgage clients still consider a mystery – underwriting. What do underwriters look for? Why do they keep asking for more documents? How can I expedite the underwriting of my home loan? If you find yourself asking similar questions, then you’re not alone.

Joe Kustra, senior suspense underwriter at Quicken Loans, helps to clear some of the confusion surrounding the mortgage underwriting process.

“Buying a home is exciting, emotional, and can be scary, especially if something unexpected comes up along the way,” said Kustra.

Find out how to navigate common underwriting roadblocks so you can sail smoothly through the underwriting of your home loan.

Common Pitfalls and How to Avoid Them

According to Kustra, cash deposits in a bank account can be a frequent hiccup in the home buying process.

“When funds are required at closing, we typically need to review bank statements with a 60-day transaction history,” he said. If you have cash savings outside of your bank account, be sure to deposit any funds you plan to use several months before you begin your loan application.

Another common issue clients run into during the mortgage process is an outstanding balance with the IRS. Underwriters often need to request tax return transcripts from the IRS to confirm whether a client owes money to the IRS and whether a payment plan is in place.

Don’t worry – owing taxes doesn’t automatically disqualify you from getting a loan, but it can pose a problem that slows the process.

“In cases where taxes are owed but there is no payment plan in place, the balance owed has to be paid prior to closing or our client will have to show sufficient assets to cover the amount owed,” said Kustra. “If a payment plan is in place, we typically need to verify at least a three month history of receipt,” he added.

Tips to Make the Underwriting Process as Smooth as Possible

Kustra offers three tips to help you have a great underwriting experience with your mortgage.

  • Letters of Explanation:Explain in a couple of sentences anything that could give an underwriter pause when reviewing your documentation.
  • Multiple Pages:Include all of the pages in requested documents with more than one page.
  • Bank Statement History of 30 to 60 Days: Requested bank statements should include the bank’s name, client’s name, account number and balance and a 30- to 60-day history.

Biggest Challenge of the Underwriting Process

For many mortgage clients, the hardest part of underwriting is the multiple requests for documentation. Sometimes submitting one document will prompt another request for a follow-up document to verify information provided.

These document requests are critical to underwriters’ ability to accurately analyze your income, property, assets and credit so you can get loan approval.

“As an underwriter, our responsibility is to assess risk, make sure we have sufficient documentation in the file to make that decision and to meet state and federal guidelines,” said Kustra.

Common Misconceptions about Underwriters

“Oftentimes we are viewed as gate-keepers who sit in an ivory tower, question everything, and are roadblocks to a client’s loan going to closing,” Kustra said.

Instead, he wants clients to know that the underwriting team at Quicken Loans genuinely cares for each and every client.

“We want our client’s loan to close,” said Kustra. “And we want it to close as fast as possible and with as little documentation from the client as possible.”

Common Question Homeowners Have about the Underwriting Process

One of the most common questions that homeowners have during the home loan process is why so many different documents are being requested.

“As underwriters, I think it’s important that before we request a document from the client, we think through the ‘why’ behind it and double-check that it is truly needed,” Kustra said. “And when we determine that a document is definitely needed, we leave detailed notes so it can be explained to the client.”

Documentation Homeowners May Need to Provide

Avoid hiccups by prepping the following common documents that many clients are required to provide underwriters. Those include:

  • Proof of the past two years of federal income taxes filed
  • Legal documents (i.e. divorce decree, court order, letter from the friend of the court) verifying court-ordered debt, like alimony or child support
  • Rent payment history of 12 months (required by some programs like FHA)
  • Bank statement with 30-day history sourcing gift funds if gift funds are being used on a FHA loan

Best Part about Being an Underwriter

There are many factors that could sideline a loan during the underwriting process.

“For example, maybe the property appraisal came in low and now our client has to bring an additional $15,000 into closing which they weren’t expecting nor have available,” said Kustra. “When an issue like this occurs, we have a team of veteran, high-level mortgage bankers, who step in and look for viable solutions to getting the loan back on track,” he said.

For Kustra, the highlight of underwriting is when you walk away with your home loan approved. “The best part of my day is when we’ve solved the problem and have approved the loan!”

Now that you’ve got the inside scoop on underwriting, find out more about the rest of the mortgage process.

Still have questions? Talk to a Home Loan Expert and get your questions answered today!

This Post Has 22 Comments

  1. Question: If I have an offer in compromise on my tax return and it shows on my record of account transcript – how does this impact the mortgage process? I’ve already paid the OIC in full within the last 30 days and have my copy of receipts.

    1. Good morning, Chris:

      I want to make sure you get the right information so I recommend you speak with one of our Home Loan Experts at (800) 442-4383.

  2. My loan officer requested a 4506T for 2017-2019 tax return. Will they be able to see my unpaid debt to the IRS back in 2016?

    1. Hi Sok:

      I’m not really sure on that one. Also, depending on your application date, that form is being replaced by the 4506-C by the IRS. I recommend speaking with one of our Home Loan Experts at (888) 980-6716 for clarification. They would be able to give you more information!

  3. Ok so I owe Taxes from 2014 and 2016. I DO NOT have a tax lien. Will underwriting know I owe Back taxes to the IRS. My 2019, 2018, and 2017 tax returns does not show that I owe taxes.

    1. Hi Channel:

      I recommend you speak to one of our Home Loan Experts about the specifics of your situation at (888) 980-6716. I can tell you that lenders are required to look at tax transcripts, so they can see your tax history.

  4. hi
    my question is i am a self employed worker for the last 10 years i file my 2019 and 2018 taxes and did not take out deductions so i can have a high net income for more house on a mortgage. my plan is to do a amendment on my tax later. will the underwriter want to see if i made a payment agreement will the IRS. or if i have 30000.00 in my bank account after i pay for the down payment and closing can i still get a mortgage. if so i would like for you guys to contact me for a appointment. my credit score is above 780 on all three credit bureaus and i have all my 1099’s and other documents please let me know what else i need.

    1. Hi Bruce:

      Those are complex issues that very much come down to your personal situation. Because this, I think it best to speak with one of our Home Loan Experts at (888) 980-6716 to go over this. Thanks!

  5. I’m first time buyer FHA loan with 3.5% down payment. I did not know that my taxes must be paid to IRS before I apply to mortgage loan. I didn’t ask and no one advise me.
    My file just sent to underwriter and he’s requesting the last 3 years of tax return transcripts from the IRS. I owe money to IRS 2009 , 2010 and 2011. What do I need to do ? I don’t want to lose this house. Can underwriter Find out about my old unpaid taxes ? Can I pay taxes in full and send it to underwriter or he’s going to denied my loan ?

    1. Hi Omar:

      First, provide the transcripts he is requesting. You won’t get the loan without them. Second, to the extent that you have to pay off any back taxes, it’s the policy of Quicken Loans that you have the option to pay them off prior to closing. A repayment plan may not be an option in this case because you need to have one set up with 3 months of documented payment history. I want to note that if you’re working with another lender, they may have different policies. I hope this helps!

  6. I am truly upset with the underwriters of Quicken Loans as my son, who has excellent
    credit, has applied for a loan to buy a house. The Underwriters found his name on
    a mortgage that my sister’s name was the only one on the contract. She signed a statement around 2006-2007 removing my nephew’s name and now Bank of America cannot find this legal piece of paper, so, of course the Quicken Underwriters are now denying him a contract so that he cannot buy the home!!!! We had to claim bankruptcy as Bank of America, under the Obama Administration (his keep you in your home deal), denied us saying we did not make all of the payments on time which was an outright lie!! Therefore, the bankruptcy, as we had no other choice. Now, my poor son who has done nothing wrong and is a stellar employee in the federal government, has to pay the price of not being able to buy a first-time home, and his 3 children are devastated. Where is the justice and fairness?

    1. Hi Susan:

      I’m going to have our client relations team reach out to you to get the name of your son and other pertinent contact information, so we can look into what’s going on here. There are certain things that the major mortgage investors who buy loans from the vast majority of lenders require us to check on, so we do our due diligence while at the same time trying to find the best possible option for each and every client. I’m going to get this to our team.

  7. We lost our Banner Bank Checkbooks last week. Their Representative cancelled the lost accounts and immediately reopened a new joint account for us. We cancelled Mona’s separate account as it was not needed. No one wrote any bad checks. Our personal loan payment will come out of the new account.

    1. Good morning, Ken:

      I see you and Mona are working with us. Thanks for reaching out! I’m going to get this to our team for awareness. Have a good day!

  8. I haven’t filed an income tax return since 2014. I have been on Social Security only since then. The IRS told me to not file a return. I haven’t paid any rent since 2015. I stayed with veteran buddy for 3 years while I built my new house. He passed away right before I moved into my new house on Nov 2018.

    1. Hi Wayne:

      I see that you’re working with us, so I’m going to get this to someone who can go over any options we may have for you. Have a great day!

    1. For sure, Dorothea! I see you’re working with us. It’s important that we keep our clients informed throughout the process. We’ll definitely continue to keep you in the loop!

  9. Nick K. is a very knowledgeable representative and a genuinely nice guy! Great working with him. Looking forward to closing and Spring.
    Thank you,
    Nina Mott

    1. I’m glad to hear you’re having an excellent experience, Nina! I’m going to make sure to get your comments to Nick and the rest of the team. I’m sure they’ll be happy to see this!

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