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Underwriter

Underwriter

What is an Underwriter?

Underwriters are the people who approve or deny a loan application. Underwriters know the criteria around providing a loan and have knowledge around the metrics a property investor needs to hit in order to qualify for a loan.

Underwriters take a look at income, credit worthiness, and loan attributes (loan size, down payment, property purchased) in order to determine this decision. At times, underwriters may be enabled by technology in order to come to a decision. In mortgages, Fannie Mae and Freddie Mac offer "Desktop Underwriter" (DU) to check for credit risk in an automated fashion.

The main purpose of an underwriter is to help the financial institution understand what kind of risk the borrower brings based on their past behavior and asset attributes. Understanding this risk allows the financial institution to properly price the risk and determine what interest rate to charge.

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