What is a mortgage underwriter?

Mortgage underwriting is the process lenders use to determine if the risk of offering a mortgage to a particular borrower under certain parameters is acceptable. This process takes place behind the scenes between the loan approval and closing.

Underwriter’s look at numerous items but they fall under three categories.

1. Credit
   1. How well has the borrower managed their prior and current debts?
2. Capacity
   1. Is the borrower able to pay back the loan with the income they generate?
3. Collateral
   1. Refers to the value of  the property. They determine this value by doing an appraisal.

What is an appraisal?

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 hires an independent appraisal, this personal will do a physical inspection of the property and the area and then look at what they call “comps”, comps are data of like properties that have sold in an area over a period of time.