You get preapproved for a mortgage and you choose a house to buy. Everything is set in stone then, right? Well not quite. The loan is not approved for sure until it passes through underwriting. What exactly is underwriting? Here is an explanation of what underwriting is, what takes place during this process, and why it is needed.

Underwriting occurs after the offer is accepted, and all lenders must use underwriting

The first thing to understand about underwriting is the timing in which this step occurs. For a file to go to underwriting, a person must submit an offer to buy a house and the seller must accept it. The person buying the house must also be currently working with a lender. The process of underwriting occurs during the time frame after a deal is reached and before the deal closes.

It is also important to know that underwriting is not optional. All lenders are required to send their files to an underwriting department for evaluation before they close on the loans. This is standard across the board.

Underwriting is designed to verify every detail of the transaction

Underwriting is often the part of getting a loan that people do not like, and this is primarily because the team of people working in this department is there to fully evaluate every single detail of the transaction. This primarily involves personal details about you. The goal is to ensure that you meet the conditions and criteria for a loan, and the underwriters will determine an answer to this by looking into the following things:

• Your credit
• Your income
• Your debts
• Your job
• Your bank accounts

Underwriting also looks closely at the house you are aiming to buy to ensure that it is worth the price you are paying and that there are no additional liens on it other than the loan the seller has on the house. So they make sure that the loan will work for everyone. 

Underwriting might ask for things from you

During this process, you might hear from your lender that underwriting is requesting documents from you. If this happens, make sure you give your lender anything that is requested. This will be necessary for underwriting to approve your loan.

When underwriting receives your file, they may need a couple of weeks to work on it. If everything passes their standards, they will let your lender know that your file is approved and that you can now schedule your closing. If you have questions, talk to a mortgage lender or bank today about the process to get a home loan.