Once you apply for a mortgage, the Loan Originator gets the file prepared to then pass over to a Loan Processor who submits your file to a Loan Underwriter. Once the Loan Underwriter has the file, their job is to either approve, suspend or decline the loan in process. How the underwriter decides on if the loan is approved or not, is based on the three C’s of mortgage underwriting. Those are:
- Credit – showing your payment behavior over time
- Capacity – your ability to repay the home loan
- Collateral – the value of the underlying asset (the house)
The underwriter must decide based on the criteria if the borrower is a risk to the mortgage lender. Once they have decided the outcome, the loan will then move forward with processing.