Becoming a mortgage loan underwriter is a great career choice for anyone interested in the mortgage industry. Underwriters play a critical role in the homebuying process by reviewing loan applications and determining if the bank should approve or deny the loan. It’s a complex job that requires strong analytical, communication, and multitasking skills.
If you’re considering this career path, this comprehensive guide will walk you through every step of the process We’ll cover the job duties, education requirements, licensure, training programs, salary potential, and more. Let’s get started!
What Does a Mortgage Underwriter Do?
Mortgage underwriters thoroughly analyze loan applications to assess borrowing risk Their primary duties include
- Reviewing loan documentation like credit reports, pay stubs, tax returns, and appraisals to verify applicant information
- Analyzing applicant finances including income, assets, debts, and credit history
- Evaluating property value and loan-to-value ratios
- Determining if applicants meet mortgage eligibility and underwriting guidelines
- Identifying risk factors and red flags
- Providing conditional loan approvals or denials
- Working closely with loan processors, originators, appraisers, and real estate agents
It’s a detail-oriented job that requires underwriters to evaluate complex financial information and make prudent lending decisions. Strong math, analytical, and decision-making skills are essential.
Education Requirements for Mortgage Underwriters
While there are no formal education requirements, most mortgage underwriters have at least a bachelor’s degree. Common majors include finance, economics, accounting, business, and mathematics. Coursework in real estate or financial analysis is also helpful.
Some employers may prefer candidates with a master’s degree in a relevant field like business administration or finance.
Specific mortgage underwriting training and certification can also make you a more competitive applicant. Programs like the Certified Mortgage Underwriter (CMU) credential from the National Association of Mortgage Underwriters (NAMU) provide comprehensive training on topics like lending guidelines, financial calculations, and risk assessment.
Prior experience in related fields like lending, banking, credit analysis, or mortgage processing is also viewed favorably.
Mortgage Underwriter Certification and Licensing
Depending on your state, you may need to obtain certain licenses or certifications to work as an underwriter:
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State License: Some states require mortgage underwriters to have a mortgage loan originator (MLO) license. These licenses demonstrate your knowledge of state mortgage lending laws.
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NAMU Certification: As mentioned above, NAMU offers the Certified Mortgage Underwriter (CMU) credential. This involves passing a comprehensive exam that covers all aspects of underwriting. It shows a strong command of conventional and government lending guidelines.
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Fannie Mae or Freddie Mac Certification: You can get certified directly through these government-sponsored enterprises. Their programs allow underwriters to approve loans eligible for sale to the GSEs.
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VA Certification: Underwriters who want to approve VA loans must complete the VA’s certification course and exam.
Before pursuing any licensure or certification, check your state and employer requirements.
Underwriter Training Programs
Formal underwriter training programs provide the hands-on experience and skills development you’ll need to excel in this career. Here are some options to consider:
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Employer training – Many lenders provide extensive on-the-job training for new underwriters including shadowing senior underwriters, completing coursework, and a probationary learning period.
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NAMU bootcamp – This 5-day virtual bootcamp from NAMU covers all aspects of underwriting with instruction from senior industry experts. It combines lectures, demos, group discussions, and practical exercises.
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University certificate programs – Some colleges offer undergraduate or graduate certificates in mortgage underwriting. Curriculum covers risk analysis, lending guidelines, credit evaluation, and more.
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GSE training – Fannie Mae and Freddie Mac have their own underwriter certification programs to train underwriters on their specific guidelines and loan products.
A combination of formal classroom learning and on-the-job training produces the most job-ready underwriters. Expect the initial training period to last around 6 months.
Skills Needed to be a Successful Underwriter
Underwriting requires a specific set of hard and soft skills:
Analytical skills – Reviewing financial documents, assessing risk, and making prudent lending decisions requires strong analytical and problem-solving abilities. Underwriters must be able to synthesize data from many sources to make objective determinations.
Communication skills – Underwriters need to clearly explain the reasons for their decisions to loan officers, management, and borrowers. Strong written and verbal communication skills are key.
Attention to detail – Identifying inconsistencies and red flags requires meticulously reviewing volumes of documentation. Carelessness could lead to big mistakes.
Time management – The ability to multitask, prioritize, and work efficiently is crucial to handle high underwriting workloads.
Technical skills – Underwriters must adeptly use databases and automated underwriting systems to evaluate applications and documentation.
Teamwork – Close coordination with processors, originators and other personnel is essential for smooth underwriting. Being able to collaborate is a must.
Mastering both the hard technical skills and soft people skills leads to underwriting success.
How to Become a Mortgage Underwriter: Step-by-Step
If you’re ready to start your underwriting career, follow these steps:
1. Earn a bachelor’s degree – Major in a relevant field like finance, accounting, economics, mathematics, or business. Consider earning a master’s degree for better job prospects.
2. Gain relevant experience – Having a background in related mortgage fields like origination, processing, or analysis is extremely helpful for underwriter roles. Internships and entry-level jobs in banking, lending, or credit analysis also provide good foundational experience.
3. Consider underwriter certification – Earning an industry-recognized certification like the CMU demonstrates your commitment and ability. Certifications make you a much more attractive candidate.
4. Complete underwriter training – Go through formal underwriter training like a bootcamp or employer program to hone your skills. On-the-job training is also invaluable.
5. Get licensed – Obtain any required state MLO licenses. Also consider GSE underwriter certifications.
6. Search for underwriter job openings – Look for entry-level roles at banks, mortgage lenders, credit unions, and mortgage insurance companies. Be prepared to start as an assistant underwriter or junior underwriter.
7. Apply and interview for positions – Highlight your financial analysis skills, attention to detail, and passion for the industry. Attend job fairs and use your professional connections during the job search.
8. Land the job and keep learning! – Congratulations! Never stop building your underwriting skills and industry know-how.
The mortgage industry provides great opportunities for underwriters to build their careers. Follow these tips and you’ll be well on your way!
Mortgage Underwriter Salary and Job Outlook
Pursuing an underwriting career is worthwhile given the competitive salary and excellent job growth potential.
According to the Bureau of Labor Statistics, the average underwriter earns around $77,000 per year. With experience, salaries can range from $92,000 to $117,000 annually. Senior underwriters and managers earn $132,000 or more.
In addition to competitive base pay, mortgage underwriters often receive strong benefits packages, bonuses, 401K/retirement matching, and profit-sharing opportunities.
The BLS projects underwriting jobs to grow 4% from 2021-2031, keeping pace with average national job growth. Strong prospects are expected as mortgage demand remains robust.
Underwriter salaries and demand can fluctuate based on economic cycles and mortgage industry trends. But overall, underwriting provides financial stability and great long-term career mobility.
Next Steps to Advance Your Underwriting Career
Once you break into the mortgage underwriting field, there are many ways to keep advancing:
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Obtain additional certifications like the Certified Master Underwriter (CMU) credential to showcase your expertise.
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Take on more complex loan products like jumbo, adjustable rate, and specialty mortgages.
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Pursue managerial roles like team lead, quality control supervisor, or underwriting manager.
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Transition into related mortgage roles in risk management, credit policy, or mortgage servicing.
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Become an underwriting subject matter expert or mentor for junior staff.
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Consider an underwriting career with mortgage insurers or government agencies like Fannie Mae, Freddie Mac, or VA.
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Leverage your expertise to move into mortgage consulting or training positions.
Underwriting offers diverse career development paths. Continuing education, specialization, and leadership skills will help take you to the next level.
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Education and Training Requirements
Recommended high school classes include business, economics, accounting, statistics, mathematics, and computer science. Strong communication skills are needed to work as a loan underwriter, so be sure to take English and speech classes. Loan underwriters also need excellent analytical and critical-thinking skills. Taking history, social studies, and philosophy courses will allow you to develop these abilities.
You can enter this career with only a high school diploma, but many employers prefer to hire applicants with a bachelor’s degree in business, business administration, accounting, and finance.
Once hired, new underwriters receive on-the-job training that typically lasts from three to six months.
Other Education or Training
Keeping up with industry developments is key to success as an underwriter. Professional associations often provide continuing education (CE) opportunities. The National Association of Mortgage Underwriters offers classes such as Mortgage Underwriter 101: The Essentials, Commercial Processing and Underwriting 101, Advanced Commercial Processing and Underwriting, and Due Diligence: Learn Manual Underwriting. The American Bankers Association offers CE courses such as The Commercial Real Estate Underwriting Process, Processing and Underwriting Credit, Fundamentals of Mortgage Lending, Law & Banking: Principles. Companies such as Fannie Mae and Freddie Mac also provide a variety of professional development classes and webinars. Contact these organizations for more information.
The American Bankers Association offers a certificate in business and commercial lending that covers credit analysis, underwriting, and other topics. To earn the certificate, students must complete the following classes: Understanding Business Borrowers, Analyzing Business Financial Statements and Tax Returns, Analyzing Personal Financial Statements and Tax Returns, Qualitative Analysis and Determining a Credit Risk Rating, and Loan Structuring, Documentation, Pricing and Problem Loans.
How to Become a Mortgage Loan Officer in 2024! (Step by Step)
FAQ
How long does it take to become a loan underwriter?
Is it hard to get into underwriting?
Does a mortgage underwriter need a degree?
Is being a loan underwriter hard?
How do I become a mortgage underwriter?
Most mortgage underwriters gain experience in their industry by initially working as loan officers or processors. You could also apply for a position as a mortgage underwriter assistant. Opt for training and certification. The quickest way to advance in your career as a mortgage underwriter is to get training and become certified.
How long does it take to become a Master mortgage underwriter?
Certified Master Mortgage Underwriter (CMMU) – this certification option is considered an advanced degree and requires 24 hours of training. The candidate must stills core an 85 percent or higher on a 30 question exam and successfully pass a criminal background check. Know what’s expected.
How do I find a mortgage underwriter training program?
To find Mortgage Underwriter training programs, either select one of the recommended courses or “Underwriting” from the “Professional Development” section of the search box below. What The Mortgage Underwriter Does What Does A Mortgage Lender Do? Steps For How To Become A Mortgage Underwriter
What does a mortgage underwriter do?
A mortgage underwriter works for a bank or other mortgage lender. They are responsible for determining the eligibility of a borrower for a mortgage loan based on the lender’s guidelines. An underwriter will review documentation like bank statements, pay stubs, appraisals, and credit reports to determine the creditworthiness of a borrower.