Did you know that after getting preapproved for a mortgage loan, there are a lot of steps that must take place before you can actually close on the house you want to buy? A lot of people confuse a preapproval with an approval, but there is a difference. To go from being preapproved to actually getting approved, the loan must pass through underwriting, and here are some of the steps that take place in underwriting.
Income Verification
Even though your lender would have already verified your income when you went through the preapproval process, underwriting must do this again. They do this to ensure that you still have the same job and that nothing has changed with your income or job. You cannot qualify for a loan if you have no income coming in, so this is a vital step you should expect when your loan goes to underwriting.
Credit and Financial Verification
Underwriting will also verify a lot of different things related to your finances and your credit. They will check your credit report again, even though your lender did this when preapproving you, and they will mainly be looking for negative changes. They will look to see if you borrowed any money recently or if your credit card balances have increased a lot. They will also look at your entire financial picture to make sure that you still qualify for the guidelines of the loan type you are using.
Review of Appraisal
Next, underwriting will check the appraisal for the house you are buying. The point of this is to make sure that the loan amount is less than the amount the house is worth. You could experience problems at this point if the appraisal is not high enough.
Overall Review of the Entire Deal
The other job of underwriting is simply to review the entire deal to ensure that you meet the guidelines for the loan you are getting. They will want to make sure the title work has been completed and that you hired all the right types of inspectors. Underwriting is designed to catch problems, and they will catch them if there are any.
Once underwriting evaluates everything necessary, they will let the lender know that the file is approved to move to close. At this point, you will be ready to close on your loan. If you have any questions about the loan process, talk to a mortgage lender at a bank today.
To learn more about loans, contact a bank near you.
Share24 February 2020
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