Understanding the Mortgage Underwriting Process

Apr 13, 2023


Mortgage underwriting happens right after you submit your mortgage application. From there, the mortgage underwriter will determine your worth as a loan borrower. And during that process, they will use a couple of factors to make a final decision.

To help you understand their criteria, we’ll walk you through the process and then provide tips to increase your chances of getting approved. 

How the Mortgage Underwriting Process Begins

To explain this in the best way possible, let’s paint a quick picture. You walk into your lender’s building, where a loan officer helps you.

You bring everything you will need to complete your loan application, SS card, state ID, pay stubs, and other related financial documents.

Afterward, your loan officer will process your information and keep in touch about the state of your application. 

The bank’s intake software can approve or reject your mortgage application before getting to an underwriter. 

Let’s assume things are looking good. From there, the mortgage underwriter will receive and verify all the information you initially shared. They may require additional documents from you to determine your worthiness. 

And then, they’ll consider two external factors to help reach a decision: the home appraisal and the title insurance.

Two Factors the Underwriter Depends On

Home Appraisal

A home appraisal ensures that your offer is reasonable. The bank does this to confirm they’re not lending you money towards a property that can’t match your offer’s value. 

Suppose the appraisal returns with an equal or higher value to your offer. In that case, your bank will go ahead and move forward with your application. If not, this is a pre-close roadblock.

Luckily, there are a few ways you can get around that. You can compensate for the price difference, have another appraisal done by a different professional, or work with another lender. 

Title Search and Title Insurance

The mortgage underwriter will conduct a title search to identify the legal owners of a property. Afterward, they can review the Title Insurance if their investigation turns up nothing to prevent the property from closing.

The lender will take title insurance which you, the borrower, will cover on closing day. You should also purchase title insurance if someone tries to dispute your ownership. 

The Lending Decision

After all this, the mortgage underwriter will come back with a decision. And there are three different ways it can conclude. 


If your mortgage application was approved, your next step is to schedule a closing day with your mortgage lender, seller, and real estate attorney.

During the closing day, you and your real estate attorney review the documents and accept the terms with many signatures and initials.

Approved with Conditions

Frequently, being approved with conditions means you must provide additional documentation for your lender. These documents can include verification of homeowners insurance, gift letters from your loved ones, and bank statements verifying your monthly income. You’ll want to ask your lender what they need you to give them to get that final approval.


If your application status is a denial, you must understand why. Doing so helps you know your next step and whether you continue your homebuying process. 

Denial can happen for a lot of reasons.

You simply might not have met the requirements for that specific type of mortgage. As such, you’ll want to consider another mortgage type whose prerequisites you meet.

On the other hand, your debt-to-income (DTI) ratio may have influenced your approval, which could stall your homebuying journey until you pay down your debts. 

Tips to Make the Mortgage Underwriting Smoother 

Don’t Apply for Major Lines of Credit

The last thing you want to do is apply for another line of credit while being considered for a mortgage. Doing can stall underwriting and can even lead to you being rejected.

For instance, your DTI ratio might already be at 36%. However, you feel relatively confident about getting approved because you have an excellent credit score and many cash reserves. So you choose to get a new credit card or a personal loan.

Your lender now has to stall underwriting (possibly reject your application) because of this new line of credit. And since you already have a 36% DTI ratio, your chances of getting pre-approved have slimmed. 

Instead, it’s best to wait until you’ve finished buying your home and signed all before considering taking out that new credit card or car loan. 

Avoid Buying Big-Ticket Items 

Speaking of cars, you want to ensure you don’t purchase big-ticket items while going through underwriting. Because once you’ve hit that stage, your lender will assess your finances, including those in your bank accounts (both checkings and savings).

So, if you buy something like a car or a motorcycle, your underwriting will once again be stalled. And your lender will have to consider you and your current finances again.

Like lines of credit, it’s best to hold off on making big purchases until you’ve completed the home buying process. 

Respond to Inquires as Soon as Possible 

Your mortgage lender may ask for additional documents they need to review before they can approve. It’s vital to be responsive.

Suppose you ignore your lender or refuse to hand over any documents. In that case, they might deny your application simply because they could not verify your current financial status.

A good example is your lender wanting to see a copy of your investment accounts, which are assets they know you have and can draw money from. But you cannot give them those statements for one reason or another. As such, they rejected your application because they couldn’t verify your total assets. 

On the other hand, if you could get them that statement verifying your claims when they needed it, you would have a better chance of getting approved. 

Mortgage Underwriting Can Take a While 

The mortgage underwriting process can take a few days to a few weeks. So, don’t feel weird if you haven’t heard anything from your loan officer or anyone from your lender.

If you ever get nervous or feel there’s something else you need to provide, you should consider talking to your loan officer.

You can expect a closing date for your loan and home closing since these are based on how long the lender expects the mortgage underwriting process to take.