The Underwriting Process: Everything You Need to Know

Do you know that 65% of homeowners in the US have a Mortgage? 

Are you planning to take out a home loan in Texas? Many mortgage lenders can help you get approved for a loan. However, one thing sets a lender apart from the rest- underwriting approval.

Before applying for a mortgage, you need to understand the underwriting timeline. This blog will help you understand the underwriting process in detail. Plus, we’ll also cover important topics related to mortgage underwriting. So jump straight into the article and get approved!

What Does Underwriting Mean?

When applying for a conventional home loan, your application goes through a process known as “underwriting.” Lenders verify your financials and other documents to determine your loan eligibility during this process. It’s an essential process for lenders, as it helps them decide whether or not you’ll be able to repay your loan on time.

When it comes to underwriting, lenders check your – savings, income, credit history, debt, assets, etc. In addition, they also verify your property documents. If your application meets their requirements, they will approve your application.

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When we say: “lenders carry out underwriting,” we refer to the professionals who take care of the process under the lender’s name. The individuals responsible for carrying out the underwriting process are known as underwriters. These underwriters are experienced and skilled enough to determine if you qualify for a mortgage loan.

An underwriter checks your finances very precisely. Therefore, they will point out lack points in your application, if any. This will may result in a delay in your loan approval. 

Therefore, understanding the working of underwriting and the average timeline of the process helps you dodge any potential hurdles. 

Underwriting Timeline – How Long Does The Process Take

According to Ellie Mae, the average time from – when your lender gets your application – to when it’s approved is around 52 days. 

However, in recent years, these periods have changed a lot. Here are some major types of loans and their respective underwriting duration: 

To conclude, 52 days is the average time required for the underwriting process. But why is the underwriting process so time-consuming? It’s because various stages are covered under it. 

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These stages ensure that you are a credit-worthy candidate for a mortgage. Unfortunately, your application can be delayed further with each problem that the underwriter discovers, your application can be delayed further.

Aside from some obvious flaws in your application, other factors are responsible for your application’s delay. Here are some of those significant factors:

  • Number of applications your lender have received
  • The policies and procedures of your lender for underwriting
  • The complexity of your financial situation

For individuals with complex financial history, self-employed, for example, the underwriting process takes more time than usual. However, many lenders in Texas can do the job fast and effectively. With help from an experienced lender, you won’t need to worry as much about delayed underwriting.

When you have found your lender, the next step is to send in your application. Here’s everything you need to know about your mortgage process. 

Mortgage Lending Process – 6 Key Steps

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When applying for a mortgage, you will go through six steps. Here are they: 

Step 1: Application

The first step is determining which type of mortgage suits you the best. Then you send your proposal for that mortgage to your local mortgage lenders. Based on your application, your lender will send you a proposal. 

Step 2: Interest Proposal

You will receive a proposal from your lender. This proposal includes the amount of interest, the gross monthly amount, the mortgage sum, and the fixed-rate period. You will also find what additional information and documents they still need from you.

Step 3: Documents

In this step, you provide the documents that the lender needs to make a decision on your loan. You can do this step yourself or through your agent. Make sure that the lender receives the documents within six weeks. If they need additional documents, they will let you know.

Step 4: Quote

Once all documents have been provided and your application has been approved, you will receive a quote from your lender. It will give the certainty that you’re eligible to get a mortgage from them. Then, you can sign the quote and send it back to your lender.

Step 5: Notary

Once your lender receives the signed offer from you, they will move forward to the notary. The notary arranges the legal and financial transfer of the property. Your lender will ensure that the required amount is at the notary on time. The notary makes sure, among other things, that you get your money on time. 

The notary informs the lender and you of the passing date no later than five days before passing. That is the date on which you sign the mortgage deed. After that, the mortgage process is complete! You will receive your funds within a few days or instantly after signing the deed.

Lone Star Financing – Your One-Stop Mortgage Solution

We hope the above information will help you during your mortgage underwriting process. Do you want to apply for a mortgage but don’t know which lender to go with? Lone Star Financing has got you covered!

We are one of the most reliable and experienced lenders in the industry. We offer low rates, low fees, fast closings, and the best customer service. So get in touch with us today to start the lending process!