Home Equity Line Guide
Equity Line Appraisals & Underwriting
Equity Line Appraisals and underwriting
Underwriting is a process by which the details of your assets are verified and determined that you are eligible for a loan. Although underwriting works behind the scenes, it will definitely involve you. Lenders may ask you a variety of questions as to the requirements of the loan such as the amount of your assets, bank deposits, income ratio and more.
Although the underwriting process takes one to two weeks to complete, it involves a third party, such as Appraisals.
Who is the investor of my loan?
The investor of your loan is usually determined by the type of loan you’re getting. For FHA loans, the investor is the Federal Housing Administration. For VA loans, it’s the U.S. Department of Veterans Affairs. The investors for conventional loans are usually either Fannie Mae or Freddie Mac – two government-sponsored enterprises that were created to stimulate the housing market.
What is the job of an underwriter?
The lender must evaluate your future home before lending to you. The job of an underwriter is to assess how much risk your lender is taking by lending to you by determining the value of your future home.
It also helps determine if you are eligible for a loan. They will also help you to properly submit the paperwork with all the information and details. The mortgage underwriter decides that if you qualify for the loan then you will get the loan. If you do not qualify, you will be denied a loan.
Here are some of the things a lender does:
Check your credit history: The first task of an
underwriter is to check your credit score. Then, he will create a report on
your credit card history. He will check your credit card score and will
definitely like it above 620.
Take the help of appraisal: The underwriter will take
the help of an appraisal. The appraisal will make sure that the price of the
fixed house matches the market price.
Income Verify: The underwriter will verify your monthly
income and decide if your income is sufficient for the loan.
Debt to income ratio: The purpose of checking the debt
to income ratio is for the lender to look at the ratio of your monthly income
to expenditure. The underwriter will compare your monthly income and the amount
of debt to see if you have enough cash to cover your monthly payment, taxes and
Savings Verification: When you close the loan it will check
if you have enough savings as closing fee. Underwriter checks your savings
account to make sure.
Most appraisals cost between $200 and $600, but keep in mind that the cost can exceed that range.
The cost of an appraisal varies based on the type and location of the property. Your appraisal may cost more if you have a multiunit property instead of a single-family home, for example, or if you live in a remote area.
Low home appraisal
The lender will not want to lend you too much if the appraised value of your home is low. A low rated home loan can be problematic. But if the valuation of your home is low then there are several ways you can do it.
Decrease the value of refinance: To bridge the gap between the value of your home and the balance of your debt, you need to reduce the amount of cash you have.
Cancel Refinance: It is not advisable to apply for refinance if the value of your home is low. So consult a Refinance Expert first regarding your unique mortgage situation.
What is the relationship of an underwriter with appraisal?
You must have needed an appraisal to determine the value of the property when you purchased it. Appraisal will basically determine the current value of your home or property. Although many lenders do not require appraisal. However, the relationship of appraisal with the underwriter is that when the underwriter collects the details of your property, he will determine the value of your property with the help of appraisal. Appraisal costs $200 to $ 400, but may vary from place to place. If you live in a remote area then the fee will be more.
How long does underwriting take?
The sooner you can submit your correct information and the underwriting of details, the sooner your job will be finished. The loan process will start when the underwriting has completed the verification of all the documents. It takes a maximum of one to two weeks. So you must submit all your details and information documents to the lender in time and the lender will fulfill all the requirements. Then the loan process will be smoother and it will be easier to get a loan.