Reasons for Mortgage Pre-Approval | Underwriting

Phoenix Arizona Mortgage Pre-Approval

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 

In today’s world just about everything is automated.  We have phones that tell us what to do, cars that tell us where to go and computers that tell us how are families are doing!  It’s no surprise that automation is a big part of getting pre-qualification for a home loan.  The vast majority of all Phoenix area loan applications are now run through what are called “automated underwriting systems” or “AUS” for short.  Basically a computer system that analyzes each Arizona mortgage loan application.

Fannie Mae uses a system called “Desktop Underwriter” (the standard for the industry), Freddie Mac uses a system called “Loan Prospector,” USDA uses a system called “GUS” and  both FHA and VA loans are run through Fannie Mae’s system (DU).  All of these systems analyze every single aspect of a mortgage loan application.  They review an Arizona borrower’s income, assets, liabilities, credit, employment history, residential history and much MUCH more.  Each Phoenix Arizona area mortgage lender bases (for the most part) what loans they will approved and fund on the “advice” of these systems.  However, all AUS systems are built to leave some of the underwriting and application analysis up to the borrowers lender – yes human beings!

Mortgage-land where Machines Don’t Rule

Lets take ourselves out of the Terminator/machine run world mindset for a moment.  In the current mortgage world, there are several cases where factors exist that absolutely require a human mortgage underwriter’s analysis.   In fact, just about every loan application requires some human interpretation of the AUS’s findings or approval recommendation even if the AUS says the borrower is qualified for a mortgage.  If your loan officer depends solely on an AUS for approval, the door to last-minute surprises is left wide open.  Let’s look at a few examples:

   1. Borrower has late payments after a bankruptcy:  Typically having late payments after a bankruptcy presents an issue for a borrower looking to obtain
mortgage pre-qualification.  However, AUS systems are not built to pick this up nor are they built to analyze it.   The reason is that lenders are required to dig deeper and
find out why a borrower has late payments after a bankruptcy.  The final underwriting decision will be based on a human interpretation of whether or not the
reason behind the late payments is acceptable or not.

  2. Borrower does not have enough trade lines/has thin credit:  Certain mortgage loan types require a borrower to have a minimum number of trade lines or creditors showing on their credit report in addition to meeting a minimum credit score to qualify.  AUS systems are not set up to recognize this.  While a mortgage lender may receive a qualification through an AUS, a file with insufficient trade lines would not successfully close/fund if it did not meet trade line guidelines.   There are several other credit related issues that work similarly to this.  Bottom line, human review is required (an experienced human’s review).

3. Garbage in/garbage out: As I mentioned in the previous entries in this series income and assets on every Arizona Pre-qualification and mortgage loan application need to be analyzed correctly by an experienced Arizona mortgage loan officer.  If incorrect data is entered on a mortgage pre-qualification application and run through an AUS, the qualification is not going to be accurate.  Your loan officer needs to take the time to make sure all of the info that your qualification is based on is accurate and verified so that the qualification is reliable.

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

It is my job as your Arizona Mortgage Lender to thoroughly review all of the information/data related to each loan application and qualification along with the AUS findings so that I can determine how a human underwriter will interpret each unique application.  Beyond that, it is my job to understand current mortgage loan guidelines and to stay up on the constant changes in the mortgage industry/Phoenix Arizona market and comprehend how they apply to every file I review.  Any slight error or any assumptions made by the mortgage lender can cost a Phoenix area home buyer time, energy and money that they cannot get back.  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.

Please let me know how I can help you achieve your dream of home ownership and avoid costly surprises.  You can APPLY NOW.

By Jeremy House

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