Reasons for Mortgage Pre-Approval | Underwriting

This is part 5 in my series about why not to skip a single step in the Arizona mortgage pre-approval process called “Reasons for Mortgage Pre-Approval.”  See the rest of the series.

Reason #5: Underwriters Have Final Say 

Automation is taking over!  Our phones tell us what to do.  Our cars tell us where to go.  Camera’s on the street tell the police if we are speeding.  You get the idea.  In this automatic world it’s no shocker automation is part of the home loan process.  For example, all Phoenix area loan applications go through “automated underwriting systems” or “AUS” for short.  Basically a computer analyzes each Arizona mortgage loan application for it’s creditworthiness.

In fact, each loan type seems to have their own automated underwriting sytsem.  Fannie Mae uses “Desktop Underwriter”.  Freddie Mac uses a system called “Loan Product Advisor”.  USDA uses a system called “GUS”.  Both FHA and VA loans get run through Fannie or Freddie’s systems.

Each system analyzes every aspect of your home loan application.  For example they look at:

• income
• assets
• liabilities
• credit
• employment history
• residential history
• and much MUCH more

Each Phoenix Arizona area mortgage lender factors the AUS’s feedback into their decision on every loan.  However, in spite of these mortgage machines doing a lot of the lifting,  underwriting is ultimately left up to a human underwriting.

Mortgage-land where Machines Don’t Rule

Lets remove ourselves from the Terminator movie-like machine run world for a moment.  Several scenarios exist where a human must review, verify and/or decide.  In fact, nearly every loan application needs a human touch.  Loan Officers often make the mistake of relying solely on the AUS findings.  Doing so leaves the door to last-minute surprises wide open.  For example:

1. Borrower has late payments after a bankruptcy
2. Borrower does not have enough trade lines/has thin credit
3. Garbage in/garbage out

Bottom Line Arizona Buyers – Get Pre-Approved with an Expert

Garbage in / garbage out is the most toxic of the 3 examples above.  After-all the loan officer that is careless enough to depend solely on the AUS may also be the same one that is careless about completing an application.   If an AUS reads an inaccurate application and approves you, you will not know it until it is too late.

For example, loan officers often calculate income incorrectly.  The AUS only knows the income entered by the Loan Officer.  Loan officer enters a higher than accurate income may work.  However, when income is corrected perhaps it is not enough to qualify.  The trouble is this type error is found by underwriting near the end of the process.

Your Arizona Home Loan Officer’s job is to thoroughly review all  information and documentation on your loan application.  In addition, your loan officer must understand mortgage loan guidelines and be current with all the constant changes in the mortgage industry.   Even the slightest error by the mortgage lender costs Phoenix area home buyer time, energy and money.

After reading this series you may feel that mortgage loan approval is an extensive process.   Please understand it is not. Is it a thorough process? Absolutely!  However, I can often complete a thorough and accurate qualification within just 24 hours.

By Jeremy House