An underwriter is a professional who assesses the risk of a loan or insurance policy. They work for financial institutions, such as banks, mortgage companies, and insurance companies, and are responsible for determining whether or not a loan or insurance policy should be approved.
What Does an Underwriter Look for in Bank Statements for a Mortgage Loan?
Underwriter reviews and analyze all of the documentation provided by the borrower. Let’s say the last two months’ bank statements. The underwriter will look at them to ensure that the borrower has the financial resources to make the down payment and cover closing costs, as well as to ensure that there are sufficient funds remaining to make the monthly mortgage payments. Additionally, underwriters will also verify that the borrower has a stable income and employment history.
How Does an Underwriter Evaluate the Risk of a Mortgage Loan?
The underwriter looks for any red flags or signs of financial instability, such as large and/or frequent cash withdrawals, high credit card balances, or other unusual activity that could indicate that the borrower may be struggling to manage their finances. They will also look for any borrowed money that may have been used to purchase the house.
Additionally, underwriters will also verify that the borrower has a stable income and employment history and will review credit history, debt-to-income ratio, and any other factors that could indicate that the borrower may be at a higher risk of defaulting on the loan. Ultimately, the underwriter’s job is to ensure that the loan is a sound investment for the lender and that the borrower is able to repay the loan.
This is a supplementary post to: First-Time Homebuyer’s Guide to Mortgage Approval
