The Ultimate Guide To The Underwriting Process
If you’re someone who invests in properties often and uses mortgages to finance your purchase, this blog post is probably what you’re looking for.
Mortgage lenders assess your creditworthiness via a process known as underwriting. This process determines whether it’s safe to approve your loan or not. Here’s all that you need to know about it.
What Is Mortgage Underwriting?
A mortgage lender assesses the risk of lending money to you through the underwriting process. Whether you’re borrowing from a private lender, a bank, or a credit union, they will assess if you’ll be able to repay the loan or not before approving your mortgage application.
This involves collecting the necessary documents for your application, such as your financial assets, income, equity investment, cash reserves, and other risks involved, and then verifying the information you’ve provided.
What Does A Mortgage Underwriter Do?
A mortgage underwriter will assess the delinquency risk in approving your loan. That is, it’ll look into the overall risk if you’re unable to repay the mortgage.
For that, the underwriter evaluates factors that determine your financial position, such as your credit report, credit score, and the property you’re considering buying.
The underwriter will document their assessments and weigh different elements and aspects of your loan application as a whole to finally decide if the risk is worth taking or not.
The loan can still be approved if a borrower falls short in any one area based on the strength of the other factors involved in determining the approval.
How Long Does Mortgage Underwriting Take?
The mortgage underwriting process can end in a few days or even take a few weeks, depending on whether the underwriter needs any additional information to access your application and how streamlined and transparent the lender’s practices are.
The quicker you submit your documents, the faster and smoother the process will be. However, underwriting is just a part of the overall lending process. You’ll only get loan approval and not the amount when done with the underwriting process.
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