By Adrianna Noton

If you’re contemplating the purchase of your first home, there are a few things you should be aware of before applying for a mortgage loan. First and foremost, lending standards have become much more stringent in recent years. Secondly, the amount of money that a borrower must pay upfront to secure the loan has increased to as much as 20% to 40% of the amount to be borrowed. Furthermore, borrowers are now required to prove that the wages and income they have claimed are accurate. Once all of this information has been verified, it’s the mortgage underwriter’s job to decide if the applicant will receive a mortgage.

What Do Mortgage Underwriter Jobs Entail?

The mortgage underwriter is really an insurance agent who evaluates the financial risks associated with each mortgage loan. Typically, a mortgage underwriter is employed by a lending institution and performs detailed assessments of a borrower’s ability to repay a loan. The underwriter will take all of the information that a borrower has provided and determine whether or not they’re a good credit risk. In this capacity, the mortgage underwriter has three main tasks: to evaluate the mortgage application, to create a risk analysis report and to determine the total mortgage amount that can be borrowed.

Critical Skills

Mortgage underwriter jobs are best suited to individuals with strong math and computer skills since they involve a lot of number crunching. Many underwriters have an accounting or business degree to supplement their basic math skills. Many underwriters begin their careers as assistants to more experienced mortgage underwriting specialists. In this capacity, they develop a clear understanding of the entire mortgage process and learn to stay current on recent developments in the lending industry. Ultimately, the mortgage underwriter decides whether or not a loan will be approved.

Underwriter Jobs In The Real World

An underwriter reviews five specific factors when making a decision. These are the applicant’s income, their overall debt, their total savings, their credit history and their cumulative debt to income ratio. Total income refers to all primary wages, rental income, pensions, annuities and dividends. Overall debt is the sum total of all loans, credit card debt and all other obligations of the applicant. The savings total is reviewed to ensure that the borrower has sufficient funds to pay the mortgage after the closing date. Credit reviews are also required and the applicant must meet minimum ratings in order to be approved. Lastly, an overall debt to income ratio is calculated. This number is fairly important, as most underwriters will not approve a loan if the ratio is greater than 30 percent.

In Closing

There are a number of steps a borrower can take to improve their chances of securing a loan. First, they should evaluate their current financial situation to assess their overall fiscal health. Second, they should obtain a credit report to check for any inaccuracies or errors. If possible, they should pay any outstanding loans that can be settled immediately. This will help to lock in a loan with a favorable interest rate. Finally, they should gather all of the documents they’ll need before completing the application. This will improve the chances of convincing the mortgage underwriter to approve a loan.

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