What is a mortgage underwriter?
A mortgage underwriter is an insurance professional responsible for evaluating the risk of a mortgage application, from the perspective of the financial institution. In this job, the mortgage insurer is responsible for determining the maximum amount of the mortgage granted. A mortgage is a long-term loan used to finance the purchase of a home or property.
The insurance was developed by the insurance company Lloyd’s of London to mitigate the risk of loss of the ship for a fee. This type of policy expanded as a way to allow financial companies to have security against financial loss. The mortgage underwriting process is found in North America, Europe, and parts of Asia.
There are three tasks that a mortgage underwriter completes each day: evaluating mortgage applications, determining the total amount of the mortgage, and creating underwriting reports. Mortgage underwriters are employed by the banking or financial institution directly and generally work standard banking hours. Although some mortgage underwriters work from home offices, the vast majority work in an office cubicle.
When the insurer receives the mortgage application, it looks at the total household income reported the down payment amount, and the purchase price of the property. A series of calculations are performed to determine if this request falls within the range of acceptable risk, based on the lender’s standard criteria. A computer program now performs these calculations.
The total amount of the mortgage granted is based on the information provided by the applicant and the guidelines used in the computer program. The mortgage underwriter can adjust this value based on the expected value of the property, the economic climate, and other factors. Banks and financial institutions adjust their levels of acceptable risk all the time, balancing profit opportunities and risk to the institution.
Risk analysis reports are required within each financial institution to determine the total value of the investment and the exposure to financial loss. The review and summary of these reports are used internally to adjust loan criteria. They are also used to evaluate the job performance of mortgage underwriters and loan officers.
A career as a mortgage underwriter is fairly stable as only major changes in the economy have a negative impact on property sales. Opportunities for career advancement are generally limited to managerial positions in mortgage underwriting. Many people complete additional courses to expand into other subscription types, increasing their career options. Underwriting is a numbers-driven race and requires attention to detail and computer skills to be successful.