Important takeaways
- Underwriting is a detailed review of the buyer’s finances and property.
- Income verification, document consistency, and structural or title issues are the most common causes of underwriting delays.
- Preparation, clear communication, and quick responses are the best ways to protect your client and close on time.
Underwriting is often the most stressful department the home buying process. Even well-trained buyers can experience delays or surprises when something changes or doesn’t match the paperwork. Protecting your client during the underwriting process means anticipating where the transaction stops and taking steps to prevent delays that could jeopardize closing.
Here’s what to look out for when writing, and how effective guidance can help your clients reach close on time.
What is underwriting in real estate?
Underwriting in real estate the process a lender uses to determine whether a buyer qualifies for a loan and whether the property meets lending requirements. During underwriting, the lender conducts a detailed review of both the buyer’s financial profile and the home itself before issuing final loan approval.
An underwriter usually reviews:
- Income and employment history
- Assets and reserves
- Credit profile and existing credit
- I the value of the property and situation
- Title history and insurance coverage
This stage happens after you become a buyer under contract and before closing. While prior approval sets expectations in advance, underwriting is where all information is fully verified using reviewed documents and completed property calculations.
Anticipate income and challenges for DTI
Income verification at the time of underwriting goes beyond verifying the buyer’s income. Underwriters account for the buyer ratio of income to income (DTI).including the monthly mortgage payment, principal, interest, taxes, insurance, and any HOA fee.
Even if a buyer was pre-approved, final insurance quotes, updated property tax calculations, or updated loan terms can push their DTI over the allowable limits.
Variable income account
Buyers who earn commission, overtime, bonuses, or income from multiple jobs face a major challenge income verification. Lenders typically average variable income over a two-year period, which can reduce the impact of recent months of high income.
Encourage clients to qualify using income projections consistently, and make sure they understand how their lender calculates variable income.
Prepare a self-employment income review
Self-employed buyers are carefully reviewed at the time of writing. Underwriters may request profit and loss statements, business bank statements, tax returns, and confirmation letters to verify income stability and tax compliance.
Setting expectations in advance about documentation requirements can prevent last-minute surprises.
Prevention strategy:
Help clients get it right how will their salary be calculated before applying. Review documentation requirements with their lender in advance, and collect supporting documents in advance to minimize follow-up requests.
Eliminate document inconsistencies early
Underwriters are trained to identify inconsistencies in documents that may indicate errors or possible fraud. Even small discrepancies can result in additional verification requests and slow down approval.
Common problems include inconsistent signatures, mismatched dates, spelling differences, and unexplained deposits.
Follow the rules for a mortgage down payment
When consumers use down payment gift moneylenders want clear documents showing where the money came from and that it does not have to be returned. Gift funds generally must be obtained, documented, and transferred according to the lender’s guidelines. Missing or incomplete gift documents are a common cause of underwriting delays.
Prevention strategy:
Confirm the gift funds in advance and send all the necessary gift documents and bank statements of the buyer.
Above buildings and title risks before
Underwriting isn’t just about evaluating the buyer; it also reviews the site and its subject history. Links, boundary disputes, or ownership questions can delay closing even when funding is otherwise approved.
Some common red flags include unauthorized additions, easements that affect the use, encroachment, HOA issues, or expired title transfers.
In some states, older homes may present additional challenges, including easement concerns and property line discrepancies that often come up during a title search.
Prevent writing delays under a clear application
The most effective way to protect yourself client at the time of writing is to prepare and go public.
- Send complete documents in advance
- Respond quickly to underwriter requests
- Avoid financial changes during the mortgage process
- Work with experienced local experts
Build buffer time in the transaction timeline. Regularly reviewing these steps with your client before writing begins can greatly reduce the risk of last-minute delays.
Three tips for the best underwriting experience
The smooth writing process often comes down to a few simple habits. Setting these expectations in advance helps buyers avoid common mistakes that can delay approval.
Tip #1: Avoid new debt and large purchases
Once the writing beginss, consumers should avoid opening new credit cards, taking out loans, or making large purchases. Even planned expenses, such as furniture, appliances, or a new car, can change a buyer’s credit profile or reduce available assets.
Any financial change may trigger additional reviews or delay approval. After closing, buyers can proceed with the purchase with greater confidence.
Tip #2: Respond quickly to borrower requests
It is normal that lenders to request additional documentation at the time of underwriting, such as updated bank statements or clarifications of income or deposits. Underwriters cannot move forward until these items have been reviewed.
Quick responses help keep the process on schedule and reduce the risk of last-minute delays.
Tip #3: Be organized and honest with your finances
Underwriters verify income, credit history, and assets completely. If something unusual occurs, such as a missed payment, large depositor employment gap, it is better to fix it in advance.
Reference books can provide useful context and often prevent unnecessary follow-up questions. For example, a late payment related to medical expenses or a timing issue may be viewed favorably if explained in advance.
Frequently asked questions about underwriting
How long does writing usually take?
Underwriting usually takes a few days to a few weeks, depending on the complexity of the buyer’s finances and how quickly the documents are provided.
Can the loan be denied at the time of underwriting?
Yes. A the loan can be rejected if income, debt, assets, or property issues do not meet lender guidelines.
Should buyers make financial changes at the time of underwriting?
No. Consumers should avoid opening new credit accounts, changing jobs, or making major purchases that could affect their credit score, such as buying a car.
Protecting your client during underwriting
Underwriting can feel overwhelming, but it doesn’t have to get in the way of work. When agents set clear expectations and guide customers through the process, many issues can be resolved before they become major delays.
Protecting your client during underwriting comes down to preparation, consistency, and communication. By anticipating common challenges and responding quickly, you help move the project forward with fewer surprises and more confidence.
