The Underwriting Process and Collateral

We’ve now discussed the importance of credit, and capacity- but do you have collateral? Here we explore the importance of collateral during the underwriting process. Collateral What if a borrower doesn’t pay their mortgage? Collateral mainly refers to the down payment or total equity. However, the type of property, value, the use of property and everything related to these aspects are also factored into collateral. Property type can be classified in the following order of risk from lowest to highest: single family homes, duplex, townhouse, low rise condo, high rise condo, triplex, four-pled, and condotels. Occupancy is also considered part of collateral. Owner occupied and second homes have the least amount of defaults, while investment properties have higher occurrences of default. Please note that value is also considered in this equation. Read More

The Underwriting Process and Capacity

We’ve already discussed the importance of credit in consideration of the Underwriting Process, so it’s time to discuss capacity. Many investors and borrowers aren’t sure what capacity is, in terms of a loan, so we’ve broken it down here: Capacity Can a borrower repay the mortgage? Capacity refers to the borrower’s ability to make the payments on the loan. To determine this, the UW will analyze the borrower’s debt ratios. This can be done by qualifying monthly housing expense-to-income ratio, or the monthly debt payment-to-income ratio. The current debt and assets will all be analyzed. Read More

The Underwriting Process and Credit

You need to know what makes or breaks a loan approval in order to maximize your financing potential. When you know what the banks/underwriter want, you have an edge on your competition. You should also know that the underwriter (also known as a UW) assesses the quality of the loan, banks and lenders create guidelines and computer models, known as ‘Automated Approvals’, analyze the various aspects of the mortgage and provide recommendations regarding the risk involved. You need to also realize that every Fannie and Freddie deal must be approved by this automated deal process. However, it is ultimately up to the underwriter to make the final decision on whether to approve or decline a loan. Read More

How to Get Into The Real Estate Investing Business

How to get into the Real Estate Investing Business If you’re interested in starting a successful career in real estate, you’ve come to the right place. With well over a decade of investment experience, and a portfolio that proves success, Starting Point Real Estate has become a corner stone in the Midwestern Real Estate Market. Read More

Options Available to Finance a New Home

Looking to purchase a home from Starting Point Real Estate? There are now more options than ever to help in the financing of your home. The most popular and well-known option is traditional financing. This method involves using a bank, credit union, or other mortgage company to acquire a home loan. Read More