Top 5 Things to Know About Underwriting
By Elizabeth Dougherty
Many of us who have purchased homes in
the past have visions of the underwriters
responsible for approving our mortgages.
We envision back rooms, smoke and mirrors,
and a big guy in a pinstripe suit (smoking
a cigar) who says, "Yeah, I think he's good
for it."
Truth be told, it's really not like that at all.
There is a specific process an underwriter
goes through when looking at each loan file
that appears on their desk. Major lenders
across the nation come up with new loan
matrices every month that indicate the
guidelines required to approve loans under
a myriad of programs. Each program is fluid
based upon market conditions and what is
required to package the closed loans and
sell them on Wall Street to investors.
Unfortunately, by the time you apply for
a mortgage, it may be too late to become
aware of what is required to underwrite the
particular type of loan you need. So, here
are the top 5 guidelines to keep in mind
a couple of years before applying for a
mortgage.
1 Keep cancelled checks.
If you are renting a place and your landlord
is not a corporation or institution, your
lender will require you to provide cancelled
checks to prove good rental history.
2 Be able to prove your income.
Underwriters don't like what they call
"mattress money." (That's the money your
Mom used to hide under the mattress for
special occasions, etc.) They want to know
where it came from and how you earned it.
You will either have to provide pay stubs or
bank statements to show income.
3 Have a listed employer.
Whether you work for someone else or are
self-employed, you must have a business
listing that can be retrieved from directory
assistance (411).
4 Have some open credit.
People are under the mistaken impression
that having all debts paid off makes them
seem a more attractive credit risk. This is
not the case. Underwriters generally want
to see at least two open credit cards with a
payment history and at least one loan over
$5000. The loan could be a car payment,
unsecured loan or another mortgage.
5 Keep your down payment in your
bank.
Again, underwriters don't want to hear
about the stack of greenbacks in your home
safe. They want to see a bank statement
with what is called "seasoned" funds, that
is, funds that have been in your account for
at least 60 days.
Think about these guidelines ahead of time
before applying for your mortgage. The last
thing you want to do is pick out your dream
house and have trouble getting the money
to buy it. With a little foresight, you can
breeze through the loan process and end up
at the closing table in no time.
Elizabeth Dougherty, a resident of
Auburn, is a former Real Estate Broker
and Mortage Broker. She can be
reached at EADougherty1@aol.com.
|
|
