Section Subtopics Underwriting Credit Guidelines Debt Ratios Funds To Close Compensating Factors

Credit Analysis

  Credit analysis is an essential part of the underwriting

  process.  An underwriter will review your credit history

  to determine the risk of extending a loan to you. Primary

  weight is given to your performance on mortgage

  obligations, but all areas of the credit report are given

  consideration.    

  Past and existing mortgage debt

  Your repayment history on mortgage debt is a good

  indication of your likely action on future mortgage

  obligations.  Lenders vary in how many, if any, lates

  they willl allow.

  Installment and revolving credit

  Underwriters review lates, current balance in relation to

  the limit, and terms of payment on the borrower's

  revolving and installment debt.  Generally, underwriters

  are willing to overlook isolated and minor slow payments

  indicated on the credit report. More extended periods or

  more frequent lates may pass with an explanation of the

  circumstances.

  Collections, repossession, foreclosures and bankruptcies

  Underwriters also look for collections accounts as well as

  public records, such as repossessions, foreclosures and

  bankruptcies. While these items indicate serious past

  credit problems, they sometimes have legitimate

  explanations. Different loan programs require varying

  amounts of time to have passed since a public record was

  filed.   Otherwise underwriters may require a letter of

  explanation on items noted in the public records.

Underwriting  |  Debt Ratios  |  Funds To Close

Compensating Factors