August 26th, 2017 8:03 AM by Jackie A. Graves, President
underwriter is an entity, typically a company, accountable for analyzing and
assuming the risk of another entity. Underwriting typically happens behind the
scenes but is an important aspect of mortgage approvals. The mortgage
underwriting process has five key steps: verification, appraisal, title search
and insurance, flood certification, and surveying.
After the housing crisis of the mid-2000s, the Consumer Financial Protection
Bureau (CFPB) enacted rules to protect borrowers. Under these new rules,
lenders must be sure a borrower is qualified. Verifying the information you put
on your application is top priority.
team of underwriters will check the information on your application and
supporting documents. They will call your employer, for example, to confirm
that you work at that job and that you are paid what you said you’re paid. If
you’re self-employed, you may need to supply a lot more documentation. The
amount of verification involved depends on how risky your lender perceives you
The lender wants to be sure that the price of the property you’re buying is
comparable to the values of similar properties. The lender will get an
independent appraisal of the property prior to closing, and the results could
affect the rate and terms of your mortgage. A licensed appraiser will provide
an expert’s estimated value based on a physical inspection and comparables, or
“comps”—prices paid for comparable properties that have recently sold in the
neighborhood. An appraisal typically costs between $300 and $500.
Title Search and Title Insurance
After the appraiser has looked at the physical side of your house, a title
company looks at its legal history. Your lender doesn’t want to lend money
against a house that may have claims on it. That’s why a title company performs
a title search.
company will research the history of the property, looking for encumbrances
such as mortgages, claims, liens, easement rights, zoning ordinances, pending
legal action, unpaid taxes and restrictive covenants.
title insurer then issues a policy that guarantees the accuracy of the work.
Your lender will require a title policy that protects the lender. In some
cases, two policies are issued—one to protect the lender and one to protect the
Flood insurance is not part of a standard homeowners insurance policy. If your
property is in a flood zone, your lender wants to know about it. The lender
will hire a specialist to analyze your property and neighboring sites to
determine if the home is in a flood zone; the report is called a flood
certification. If you’re in a flood zone, you’ll be required to buy flood
If you think
you may be in a flood-prone area, you can check out any property on
FloodSmart.gov before you even start searching for your new home.
Finally, some lenders will require that a home’s property boundaries be
verified by a professional survey.
all of this information is being gathered, you can help by taking these steps:
Provide complete documentation
with your application.
Respond promptly to your
lender’s request for more information.
Call your lender and real
estate agent to check on your loan application status.
Help contact employers and
others who may need to provide documentation.
Keep records of your
conversations with your lender.
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