What Exactly Does An Underwriter Do With Your Mortgage?

Certified Mortgage Advisor
NMLS 1701021
September 30, 2020

What does an underwriter do exactly for your loan?

So you're going to learn three things. Number one, why underwriting determines the fate of your loan. Number two, how to make underwriting easier, and number three, how long it takes and the things that you can do to speed up the underwriting process so you can get in your home quicker.

This is all about making the home buying process less stressful and helping you go through it as quickly as possible because getting a loan isn't super fun. We want it to be a joyful process to buy a house. So we're going to talk about how you can ease this process up.

What is underwriting?

So first let's talk about a quick overview. Think of it as a three-stage process for underwriting. So underwriting, a basic definition of what underwriting is, is the lender needs to verify your information, to make sure that you can pay back a loan. They need to make sure that if they're going to lend you $200,000, that you have a high probability of paying back that $200,000, they don't want to lose that money. So there's kind of a three-step underwriting process.

Step 1: Computer Approval

Number one, you have computer approval. So most loans are underwritten with computer software. So the computer is first going to issue an approval based on the data that you put in, in your loan application.

Step 2: Underwriter Verifies

Then in step two, the underwriter is then going to verify the information that was put into the computer program.

Step 3: Loan Approved

Then number three, your loan is approved. So the computer verified your information, then an actual person, actual human reviews your information, and then your loan is finally approved.

So let's talk about AUS

AUS stands for Automated Underwriting Software. This is a software that's going to take all the information from your loan application, and it's going to compare it to hundreds if not thousands of mortgage guidelines, mortgage guidelines are just filled with tons of different rules on what qualifies you for a mortgage and certain limitations and documentation that you need for specific scenarios. It can be really obnoxious like some mortgage guidelines are 1,500+ pages.

So, what AUS is doing is it's taking the information from your loan application and it is now comparing it to guidelines. All right. And then what it's going to do is it's going to give you an approval or denial recommendation. So the software, the guideline software, is now going to compare the information that you put in on your loan application and say, "Hey, we think this fits all of the guidelines".

AUS then, the Underwriter

So after the underwriting software says, "Hey, this fits the guidelines", then an actual human has to review that information because here's what happens is on your loan application. You might put in that you make $50,000 per year. That's great. But the computer can't tell if you actually make $50,000 per year or not, the underwriter has to actually look at your pay stubs, W2's, maybe tax returns to see, do you actually make $50,000. And if so, they will green light basically what that underwriting software is saying so you can get final loan approval.

So the underwriter is going to check over your income, your employment history, credit, and debt to income ratio the appraisal, the money that you have for your down payment, and then title, insurance, they're going to check the property to make sure that it meets lending guidelines. 

Who is setting the guidelines?

So you can see you have this kind of two-phase approach of looking at these guidelines. So you have these big organizations or these big entities that are setting up these rules. So you have people like Fannie Mae, Freddie Mac, FHA, VA, USDA, they're setting the guidelines. They're setting up thousands of pages of what qualifies you for a mortgage. You're putting in your loan application and software is comparing your application to all of these rules. And then if you get approval through the software, an underwriter, an actual human is going to double-check everything and make sure that it actually is a loan that can be approved.

Manual Underwrite

Now not all loans are run through AUS. Some are done through a process called a manual underwrite. And in a manual underwrite, this is where the underwriting software either says, "Hey, we can't really get a good idea of the risk of this loan or flat out, we just won't do an automatic underwrite".

And there are certain guidelines that, you know, Freddie Mac and Fannie Mae and FHA, USDA, and VA have for being able to give an automated approval. They're a little bit more document-heavy. They can also have a higher interest rate to them, but the benefit is you don't need a credit score to get a manual underwrite.

Your Loan Officer is your Advocate

Something that's huge here is that an underwriter is the only person who's going to approve or deny your loan. A loan officer will not ever approve or deny your loan. They do not have the authority and capacity to approve your loan. So if you ever feel like you need to talk about a financial scenario with your loan officer know that your loan officer is on your side, they don't get paid most of the time, unless they help you close a loan.

They are your advocate to the underwriter. So kind of think of them as your go-between. So you have the underwriter, then you have your loan officer and then you have you. There should be this communication channel where you and your loan officer are talking, and then the underwriter and your loan officer talking, you'll never be able to talk to the underwriter in most circumstances, you're gonna have to talk to the loan officer and the loan officer is going to be an advocate to the underwriter.

Check out my website freebies

Now, just a quick side here. If you go to winthehouseyoulove.com/free. I have a PDF that has seven different ways that you can save money on the home. And they're like actual strategies that I use with my clients to help them save money on their mortgage and their overall property investment as well.

Initial Approval

So normally you're going to have two rounds of underwriting and they're not really called rounds, but we'll kind of think of them this way. The first one that you have is you have your initial approval. So in the initial approval, this is where you're under contract for a home, or you start a refinance and you take your loan application and you submit it to your loan officer.

Then your loan officer probably is and asks for some documents, the loan officer's going to submit your loan application and documents to the underwriter. The underwriter is going to review everything. And then they're going to come back with a conditions list.

Conditions List

So we're going to refer to this as conditions. So the underwriter basically says that they'll approve the loan, as long as you meet the following conditions. And it's usually a list of it can be anywhere from two things. It can be up to 20 things. I mean, it could be higher than that. Depends on how much was submitted in the beginning. Then you're officer's going to ask you for those conditions and then ideally everything would be cleared in that second round. And then you may have another round of underwriting depending on what information was or wasn't given in here. So that those conditions are that second round of review. All right.

So you put in the documents and information to the underwriter, they gave you an initial approval, then you re-sent in new conditions, and then hopefully they should give you this final approval at the end.

Incomplete documents can delay the process

So a tip here really quickly is when a loan officer asks you for information or when a processor is asking you for documents, send in everything that you can as quickly as you can. Sometimes what happens is I'll ask clients for documents at the very beginning and they'll take a week or two to send me documents. And what they don't realize is every day that they send a document earlier to me is a potential day that we close earlier, or think of it this way every day that you wait to send an in a document, could push your closing back one day further.

So you want to submit every single thing that you have, because if a lender is asking you for documents or for information, most likely they're waiting on you, there's nothing else that they can really do behind the scenes without that information. So send everything you can send it quickly and also send it cleanly.

Organize your documents

What happens a lot of times is I'll ask for documents from people and they'll just go take loose pictures of documents and then text them to me or send me 20 emails. I can't look through all these and, you know, effectively organize them. Cause sometimes that will take me up to an hour if they're sending me this huge document package. It is really not that hard to open up a scanner app on your phone or download one. Put them all in PDFs, organize them, label them. This is my 2018 tax return. This is my 2019 W2's. This is my past 30 days of paystubs. It's not difficult to do that. It's going to help your loan get processed a lot easier and prevent somebody from having to re-ask you for documents because it's not easy on the lender side of the loan officer side when people are sending 20 plus emails to them times however many buyers they're working with. So keep that in mind. That's gonna help your loan be a lot less stressful and go through a lot easier.

Money movements

Also, don't open any credit lines and don't make any big non-payroll deposits in your bank account. So you don't want to go open a credit line, you know, don't go buy furniture, don't get a car because those are going to change your debt to income ratio and your credit score. Also, you don't want to deposit a bunch of money into your bank account that can't be verified because what's going to end up happening is the lender won't be able to use those funds if they can't verify the source and where it came from. So again, this is where you can talk to your loan officer if you need to do any of these things. If you need to open credit or you need to make a deposit in your bank account, your loan officer is your advocate the underwriter, they know what to look for and can help you come up with a plan before you actually do any of these things.


Let's go ahead and have a CalmMoment because the goal here is for you to have a calm plan and a soft-focus moving forward. So the underwriting process can be one of the most stressful parts of getting a mortgage because this really is where the fate of the loan kind of comes into play. And the underwriting process can be pretty long you know, most homes take about 30 days to close. And the majority of that time is spent in underwriting because they're trying to collect a lot of documents, so it can be really stressful.

So just know if you're feeling stressed, it's perfectly fine to talk with your loan officer and ask for their expectations about things. Hey, you know, this is taking a certain amount of time. Is this normal? Hey, is there anything else that you need from me? You don't have to keep checking in and saying, is everything okay? But hey, is there anything that I can do to make the loan easier for you? It's perfectly fine to ask those things and to let your loan officer know, hey, I'm kind of feeling stressed about this could you give me an update or could you clarify these things again? They work for you. They are the advocate between you and the underwriter. Their goal is to help you get that loan. They're not there to try to squash the loan.

Shared Folder

Something else to look at to make things easier is looking at possibly a shared folder with your loan officer. Okay. So make sure number one, that this is secure, so it's protected by a password or something like that. But, look into using it as an online shared folder to be able to upload documents to your lender instead of over email. And this is if your lender doesn't have a place to upload documents, you know, for instance, we use a document portal.

So people can upload documents securely in their accounts, but some lenders, don't have that and they just request things over email, which is not very secure and it's difficult to keep track of. So having a shared folder, one place where all of your documents are, makes it really easy to be able to see what the loan officer has access to, and then you can always refresh that and the lenders always can have that link ready when they need it.

Expect a lot of documents

Also, this is kind of a joke, but you don't need to send a blood sample. I know underwriting can be stressful and it's going to feel like they're asking for so much information. I had a lady once who did ask me, she was like, do you need me to send a blood sample too? Because it can feel like a lender is asking for a lot and I get that it's frustrating. It's part of the process nobody's picking on you. You know, you're no different than all the other people who are getting asked the same things. And if you want to, you're welcome to go look at the 1,400 pages of guidelines that show you why documents are being asked for from these government entities.

Clean and quick

It can feel like a lot. But ultimately the lenders are only asking for things because they are legally required to ask for those things. They're not trying to pick on you, even though it can feel like that sometimes. So the best thing to do is try to bear through it, send in as much as you can, again, send it cleanly incident as quickly as possible. That's gonna help your loan get processed a lot quicker.

Turnaround time

Then finally ask your lender about turn times, and this is going to help manage your expectations of how long the underwriting process is going to take. So it turns items are how long it takes an underwriter to review your initial approval and the conditions that you submit in.

So for instance from the time that your initial documents are submitted to the underwriter, it might take two days to hear back from the underwriter. So underwriters with each lender normally have their posted turn times, so they can give an expectation for how long it's going to take your loan to be underwritten.

Same thing with reviewing conditions. They'll let you know how long it's gonna take to review those conditions. Now, most of the time the lender isn't going to make that public to the buyers. But if you ask your loan officer and just say, "hey, how long do you think this is going to be in underwriting for?".

Then you can get a better idea of, "okay, if it's going to take three days, then I'm not going to bug my loan officer every single day" until, you know, to get an update on what's happening with the underwriting process.

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