Automated Underwriting and The Home Mortgage Process

automated underwritingIf you have relatively good credit, today’s automated underwriting systems provide a list of only the documentation that is necessary to satisfy the lender. The way it works is that once the lender has your application and has pulled your credit, the file is uploaded to one of three locations, Fannie Mae, Freddie Mac or possibly directly to one of hundreds of lenders. “Fannie and Freddie” are quasi governmental agencies that set the guidelines that dictate whether a loan is saleable. In other words, if it is approved by “Fannie or Freddie” virtually any lender in the country will do the loan. If it is not, hundreds of national lenders have their own proprietary systems. So plan “B” would be to go through independent channels to see if an approval is possible that way. Once an approval is obtained (it takes less than 5 minutes once we have all the information), the approval will tell us exactly what documentation is necessary to satisfy the lender. Be wary of lenders that ask for everything up front prior to having a binding approval through an automated source. They are most likely requiring you to provide a lot of personal information that may not be required.

On the flip side are the borrowers with less than stellar credit or not enough for the down payment. Although the process is typically longer and more cumbersome, it is more predictable than it was in the past. Surprisingly, programs are available that open the door to homeownership to an amazing number of people. You’d be surprised at who will qualify for a mortgage today!!