Underwriting
Buying a
home and taking
out a mortgage requires a lot of work and effort,
but once you are approved you will find it was definitely
worth the stress and headache.
Once you have been approved
for a mortgage, there is still a lot to do until closing
day, and most of this work is done by the lender in a
process known as underwriting.
Underwriting involves many things and it is usually all
done in a few weeks, from the time you are approved until
closing day.
The article, “Underwriting,” posted on Bankrate.com,
May 1, 2006 gives all the details showing exactly what
goes into the underwriting process.
The article states that there are even a few things you
can do to help speed up the process and sidestep any potential
snags that could occur.
“You can help speed the process by: Providing complete
documentation with your application. Responding promptly
to your lender’s request for more information. Calling
your lender and real estate agent to check on your loan
application. Calling your lender and real estate agent
to check on your loan application status. Helping contact
employers and others who may need to provide documentation.
Keeping records of your conversations with your lender.”
Once you have taken the precautions to help speed up the
process, it is up to the underwriter to get the last minute
details and inspections completed and in order. Now all
you have to do is wait until closing day.
The author outlines the underwriting process in a couple
of steps. There is underwriting verification, appraisal,
title search and title insurance, flood certification
and survey.
The process starts with underwriting verification. “Your
lender's team of underwriters springs into action, verifying
the information on your application and supporting documents.
They will call your employer, for instance, to verify
that you work in the job and at the salary stated on your
application. The amount of verification involved depends
on how risky your lender perceives you to be.”
Basically, they are just checking out the facts, to make
sure everything on your application is legitimate.
Next, comes the property appraisal. The lender will hire
an independent appraiser to give a numerical figure to
their estimated value of the property. This could affect
your mortgage
rate and terms.
The title search and title insurance is also important
because a lender does not want to lend against a home
that’s has problems with the title such as claims
or unpaid taxes.
“The title company will go to the county courthouse
and research the history of the property, looking for
encumbrances such as mortgages,
claims, liens, easement rights, zoning ordinances, pending
legal action, unpaid taxes and restrictive covenants.
The title insurer then issues a policy that guarantees
the accuracy of the work. Your lender will require a title
policy that protects the lender. In some cases two policies
are issued, one to protect the lender and one to protect
the property owner.”
A flood certification is conduct to see if your property
is located in an area subject to flooding. Since most
homeowner’s insurance does not cover rising water’s,
you may be required to purchase flood insurance.
And finally after all of this, there is the survey, which
is not required by every lender. “Some lenders also
will require that a home's
property lines be verified by a professional survey.”
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