Category: Underwriting

UNDERWRITING A LOAN

When underwriting a loan lenders look at the debt-to-income ratio for a comparison of monthly debts to monthly income, this is a major factor lenders consider. Lenders like to see the ratio at or below 43%, but loans have been approved up to 50%. Example: Let’s say you are salaried and gross $4,000 per month; Lenders use your gross wages, not take home, for calculating the ratio. Assume your proposed house payment is $1,000, you pay $400 in student loans and another $300 per month for an auto loan. Also suppose you have a credit card balance of $3,000 that...

Read More

UNDERWRITING: WHAT DOES THIS MEAN?

What is underwriting? Underwriting is the process of reviewing the loan package to determine whether it meets the established criteria to approve the loan. An underwriter reviews the loan package, including, the loan application, tax returns, paystubs, bank statements, retirement account statements, contract (if a purchase) and appraisal to determine whether the documents will meet the criteria to approve the loan. After the package is reviewed, one of three decisions will be issued: approval, suspension, or denial. If the underwriter is going to approve the loan, typically a conditional approval is initially issued. This means the approval is conditioned on...

Read More