Most people who buy real estate today do make use of loans to help them pay for their property. This includes residential properties like homes, town homes, condos and other similar properties, as well as more unique purchases like land, farms and ranches, and commercial properties like apartment buildings, retail centers, office buildings and more. All loans go through a mortgage underwriting process, and you will find that by educating yourself about this process you can be pursue several different career options in the mortgage and real estate industries.
The Basic Concept
When you take a mortgage underwriting class, you will learn more about some of the very detailed calculations that underwriters use in the loan approval process. These various calculations all boil down to one thing, though, and that is whether the financing request makes sound financial sense for the bank or lender. The calculations used will determine how risky the loan request is for the bank to lend on, and in this regard, the job of mortgage underwriting is quite important to the success and profitability of the institution that you may choose to work for.
A Closer Look
Each type of property that a loan request may be on will have different underwriting requirements in place, but you will find that most will use a Debt-to-Income (DTI) ratio. This ratio essentially is calculated as follows: (Personal Monthly Expenses + New Mortgage Payment) / Personal Gross Income. Each lender will have a different ratio requirement. As an example, most residential lenders want to see a DTI ratio under 36 percent. There are other calculations that may be used as well, including Loan-to-Value (LTV) ratio, and for income-producing properties the Debt Service Coverage Ratio (DSCR) is important.
If you choose to learn more about underwriting, you will find that you then have the opportunity to work in an interesting field and in a helpful position. Your position will work to ensure that buyers do not get placed in a home or other piece of real estate that they cannot afford, and it will help to reduce the risk that your bank or other financial institutions face when lending money to buyers. You can take mortgage training classes to become certified or licensed to work in this particular niche of the mortgage industry, and you can also use this education to pursue interests in real estate sales, financial advising and other similar fields as well.
The Basic Concept
When you take a mortgage underwriting class, you will learn more about some of the very detailed calculations that underwriters use in the loan approval process. These various calculations all boil down to one thing, though, and that is whether the financing request makes sound financial sense for the bank or lender. The calculations used will determine how risky the loan request is for the bank to lend on, and in this regard, the job of mortgage underwriting is quite important to the success and profitability of the institution that you may choose to work for.
A Closer Look
Each type of property that a loan request may be on will have different underwriting requirements in place, but you will find that most will use a Debt-to-Income (DTI) ratio. This ratio essentially is calculated as follows: (Personal Monthly Expenses + New Mortgage Payment) / Personal Gross Income. Each lender will have a different ratio requirement. As an example, most residential lenders want to see a DTI ratio under 36 percent. There are other calculations that may be used as well, including Loan-to-Value (LTV) ratio, and for income-producing properties the Debt Service Coverage Ratio (DSCR) is important.
If you choose to learn more about underwriting, you will find that you then have the opportunity to work in an interesting field and in a helpful position. Your position will work to ensure that buyers do not get placed in a home or other piece of real estate that they cannot afford, and it will help to reduce the risk that your bank or other financial institutions face when lending money to buyers. You can take mortgage training classes to become certified or licensed to work in this particular niche of the mortgage industry, and you can also use this education to pursue interests in real estate sales, financial advising and other similar fields as well.
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