Automated Underwriting - "My broker says he uses automated underwriting. What does this mean, and does it cost more?"

Underwriting - Underwriting is a crucial part to the loan process. Underwriting is the step in which your loan application goes through review and is either approved or denied. There are different types of ways your loan can be approved. It can be approved through the use of automated underwriting or it can be approved through manual underwriting.

Automated underwriting is an electronic process which can offer very quick approvals. Manual underwriting usually takes two to five days and is needed more often with non conforming and subprime loans.

Presentation of your file, application, and total credit package to an underwriter is of the utmost importance for your loan. This is why the use of an experienced, knowledgeable and trustworthy mortgage professional is a crucial part of your mortgage transaction. A great loan presentation can sometimes be the difference between an approval of your home-loan and denial of your home loan.

In many cases an automated underwritten approval only requires the matching documents listed on the condition list. This means as long as the mortgage broker supplied complete and accurate information when processing the automated approval, your loan should go through smoothly and without surprises in the end.

Fannie Mae's Desktop Originator (DO) and Desktop Underwriter (DU) are the most popular automated underwriting systems in the mortgage industry. DO is used by brokers and DU by lenders. Mortgage professionals can get loan approvals in literally minutes with these automated underwriting systems.

When applying for a mortgage, make sure that you reveal all of your assets to your mortgage professional. Any 401k or stock information, could be the little extra that you needed to get an automatic underwriting approval.

The Underwriting Process - The underwriting process occurs when a new loan file is submitted to a lender. They look at every detail of the loan to see if it is an acceptable risk. Afterward, they deny the loan of offer a conditional approval.

The underwriting process is when you will be asked to gather additional information for your mortgage professional. Often times they will submit a loan, and the underwriter will ask for more documentation on certain items. Do not be alarmed, this is a very common process.

After you have applied for your home loan with a loan officer your loan officer will prepare a package to provide that underwriter your loan application. A good loan officer will put the package of your application together in a very clean, clear way that the underwriter knows exactly what you are looking to do with your refinance or home purchase. Therefore, the next step after you deal with a loan officer is for your file to be sent to an underwriter and be underwritten. An underwriter is a key part of the loan process. The underwriter can make or break a loan and generally has the authority to deny a loan that he/she does not feel comfortable signing off on. The underwriter will look at every loan application and document submitted and make sure addresses match up, income seems reasonable and is well verified, appraisal report is acceptable, social security numbers and dates of birth match up, names and addresses are filled in completely and accurately, loan application is filled out 100% completely and accurately. The underwriter may condition the loan officer for items that he/she feels are deficient or not acceptable to the lenders standards.

The underwriter has the ability to approve or deny your loan application. They act as quality control agents for the lender and there main job is to spot potential problems in a loan file that may cause the company to lose money.

Topics that will reviewed by an underwriter are commonly : borrowers credit file, rent history, bank account and asset information, appraisal and title of the home.

Often your mortgage advisor can explain a situation that is not evident to the underwriter in such a way that the problems are removed without you doing anything.

In recent years, loans are mostly underwritten with automated systems. Underwriters main function nowadays is to confirm that the information entered are accurate, to clear approval conditions, and to ensure the deliverability on the secondary market.