Underwriting Your Orange County Real Estate Home Loan
When your Orange County home loan is submitted for underwriting, it goes directly into the hands of an underwriter, whose job is to determine your “creditworthiness” or your ability to repay the loan. The underwriter takes all of the following into consideration when making the decision to approve or disapprove your loan.
- Your Employment History
- A stable history of employment in the same line of work is considered ideal. Job hopping is not looked upon favorably because it may lead to unstable income. However, if you have switched jobs within the same line of work for advancement in that field there should be no problem.
- Your Income
- The underwriter looks carefully at your capacity to repay the loan. Your job stability and gross income (in relation to your expenses) are critical in this regard. Most income must be verified as having been received for at least two years to be used for qualifying purposes.
- Your Credit History
- Your credit history is an indication of your character or your willingness to repay the loan. The underwriter looks closely at your past payment record (your credit report) in determining this. Any consistent patterns of late payments, collections, etc. are not looked at favorably. Bankruptcies generally must be discharged for at least two years with re-established credit and the reason for bankruptcy must be fully explained. Good explanations for all derogatory credit will need to be provided. All outstanding collections, liens, and judgments will have to be paid off through escrow (consult your loan officer about any credit questions you may have).
- Your Assets
- The money you have available for a down-payment, closing costs, cash reserves (money left over after close of escrow to cover 2-3 months mortgage payments) and other liquid assets in your net worth. The underwriter wants to see your ability to save money and manage your financial affairs. They also need to see the “source of funds” or where the money for the down-payment and closing costs is coming from. Cash from “under the mattress” is usually not acceptable – they must verify that you have had the money (or the assets) for a two or three month period. Never move money around (pay off bills, get a gift, etc.) without first consulting your loan officer about the best way to do it, since it may affect the underwriter’s view of your loan.
- Your Debts
- The underwriter will be concerned with the amount of debt you have because it affects your qualification and your ability to repay the loan. Excessive use of credit may not be looked upon favorably.
- Orange County Property
- Because the property is the lender’s collateral for the loan, the value, marketability and condition of the property are extremely important. The underwriter looks at the appraisal for this information.