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The Mortgage Underwriting Process Explained

4-Minute Read
Published on July 2, 2019

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.

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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!

Apply for a Mortgage with Quicken Loans®

Call our Home Loans Experts at (800) 251-9080 to begin your mortgage application, or apply online to review your loan options.

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