What is Underwriting?

More than likely, you know there are things going on behind the scenes when you buy a home and one of these things is known as underwriting. The problem is that many of us, do not actually know what this means, so this article will help to explain the process.

An underwriter first must ensure that you are actually qualified for the loan. This means the underwriter will check to make sure that all of the information on your application is true and factual. This includes confirming your employment and your salary or if self-employed ensure that all documents are accurate. An appraisal will then be performed on your property to ensure that it is within the same value of other homes in your area that have the same features of your home.

Once the appraiser has provided his professional opinion on the value of the property you wish to purchase, a title company will then check the legal history of the property. This means that someone or some company has a lien on the property or may claim to have a loan against the home. A lending company does not want to loan money on a property that has easement right issues, unpaid taxes, and claims among other issues.

The underwriter will need to learn if your home is in a flood zone, as flood insurance is not always included in the basic home insurance policy. If your home is found to be in a flood zone, you will be required to include this type of insurance on the home. In some cases the property will be surveyed to check the boundaries of the property.

In order to speed up the process, you should complete your application for a loan and provide as much documentation as you have to help the underwriter to do their job. If you are asked for more information, return the documents as soon as possible, and stay in touch with the lending company to learn how your loan is processing.