(1) You may think this role is one and the same as a home loan originator … but that’s actually a common misconception. The originator organizes all of the paperwork associated with providing a mortgage to borrowers. The underwriter reviews all of that paperwork to make sure everything is in order and that borrowers are truly qualified to receive such a loan. Should the underwriter discover something off with a loan (e.g. lower buyer credit score than the one listed), they alert the originator, who will then have to rework the mortgage terms.
(2) An underwriter is an individual working for mortgage lenders who determines whether or not a borrower’s loan is approved. If a borrower gets a loan from a mortgage broker, the broker sends the loan documents to the lender’s underwriter. The underwriter evaluates the entire loan application, including the appraisal of the home, and decides whether to approve or decline the application based on the risk presented by the loan.
Underwriters often request additional information while evaluating the loan application. For example, underwriters may ask for more pay stubs and documentation of the origins of funds used for the down payment. Some lenders use underwriters who work within their firms, but also may outsource to underwriters working for other banks or mortgage lending institutions outside the state. Sometimes loans can take longer to get approved when a lender works with an out-of-state underwriter with less local knowledge.