how to become mortgage loan underwriter

How to Become a Mortgage Loan Underwriter: The Complete Guide

Have you ever wondered what it takes to become a mortgage loan underwriter? This in-depth guide will walk you through everything you need to know to start a successful career in mortgage underwriting

As a mortgage underwriter, you play a critical role in the homebuying process. You’re responsible for assessing mortgage applications to determine whether or not a borrower qualifies for a loan. It’s a role that requires attention to detail, strong analytical skills, and extensive knowledge of lending guidelines.

If you’re interested in a career that allows you to help homebuyers achieve their dreams, mortgage underwriting may be right for you. Keep reading to learn more about what underwriters do, how to become one, and what it takes to succeed.

What Does a Mortgage Underwriter Do?

Mortgage underwriters are responsible for evaluating mortgage applications to determine the risk involved in lending money to a particular borrower. As an underwriter you’ll verify the information provided by the borrower and assess their ability to repay the loan.

Some of the key responsibilities of a mortgage underwriter include:

• Analyzing borrower finances including income, assets, liabilities, and credit history

• Verifying documentation such as bank statements, pay stubs, W-2s, and tax returns

• Evaluating the property by reviewing the appraisal report

• Determining the loan-to-value ratio and debt-to-income ratio

• Ensuring compliance with lending laws and investor guidelines

• Requesting additional documentation from borrowers when needed

• Making the final loan decision – approve, deny or suspend

• Interacting with mortgage brokers, loan officers and other professionals

As you can see, underwriters play an integral role in mortgage lending. You are the final decision maker who determines if the borrower qualifies for the loan program they are applying for.

Underwriting Guidelines

As an underwriter, you’ll need extensive knowledge of your company’s specific underwriting guidelines as well as industry standards.

Underwriting guidelines provide detailed criteria that a loan must meet for approval. This includes metrics like:

• Minimum credit score requirements
• Maximum debt-to-income ratios
• Loan-to-value limits
• Reserves requirements
• Eligible sources of income
• And more

Guidelines may vary across different loan programs. For example, FHA loans have different requirements than conventional loans. Jumbo loans also have higher standards compared to conforming loans.

In addition to memorizing guidelines, underwriters must have strong analytical skills. You’ll need to be able to thoroughly evaluate financial documents, detect red flags, and make sound risk assessments.

Attention to detail is equally important in this role. As an underwriter, small mistakes can lead to big problems down the road. You must be diligent in verifying every piece of information on a mortgage application.

How to Become a Mortgage Underwriter

If becoming a mortgage underwriter sounds appealing, here are the main steps to starting your career:

Earn a Bachelor’s Degree

Most mortgage companies require underwriters to have at least a bachelor’s degree. Common majors include finance, accounting, economics, business, statistics or mathematics. Coursework in these areas will help build a strong foundation for underwriting.

Some colleges also offer specific mortgage underwriting certificate programs. These provide targeted training in areas like credit evaluation, risk assessment, lending regulations and product guidelines.

While a bachelor’s degree is the standard education requirement, some underwriters may be able to enter the field with just a high school diploma or associate’s degree combined with relevant experience.

Gain Relevant Work Experience

Hands-on experience in a related job can help strengthen your underwriting knowledge and skills. Look for positions such as:

• Loan processor – Learn documentation requirements and data verification
• Loan officer – Build lending knowledge and customer service skills
• Credit analyst – Analyze credit reports and identify risk factors
• Bank teller – Develop attention to detail while handling financial transactions
• Insurance underwriter – Apply similar risk assessment principles

Any experience in the financial services industry will help build your proficiency with loans, regulations, and analyzing financial data.

Obtain a Mortgage License

In most states, mortgage underwriters are required to hold a mortgage loan originator (MLO) license endorsed for underwriting.

To qualify for a license, you’ll need to:

• Complete 20 hours of NMLS-approved pre-licensure education
• Pass the National SAFE Mortgage Licensing Act test
• Submit fingerprints for a background check
• Meet your state’s license requirements

The process takes 30-60 days and costs around $300-$500 including education, testing and fees. Maintaining the license requires 8 hours of continuing education annually.

Earn Professional Certifications

Gaining industry certifications can further validate your expertise as an underwriter. Options include:

• Certified Mortgage Underwriter (CMU)
• Certified Master Mortgage Underwriter (CMMU)
• Certified Professional Underwriter (CPU)

These demonstrate mastery of mortgage underwriting best practices and principles. Having a professional certification on your resume can give you a competitive edge.

Finding a Mortgage Underwriting Job

Once you have the proper education, experience and licensing, you’ll be ready to start applying for underwriting jobs. Some tips for breaking into the field:

• Look for mortgage underwriter job openings at banks, credit unions, and mortgage companies
• Consider entry-level roles like junior underwriter or underwriting assistant
• Talk to recruiters and staffing agencies that specialize in mortgage careers
• Attend job fairs and industry networking events
• Follow mortgage lenders on LinkedIn and social media

To stand out, highlight your attention to detail, analytical abilities, and passion for the mortgage industry. Underwriting involves very technical work, so be sure to showcase your qualifications.

With mortgage rates rising, underwriting jobs are poised to grow substantially over the next decade. According to the Bureau of Labor Statistics, mortgage underwriter jobs are projected to increase 8% from 2020 to 2030, faster than the average for all occupations. Opportunities will be plentiful for qualified candidates.

Succeeding as a Mortgage Underwriter

Once you land that underwriting job, there are a few tips that can help you excel:

• Ask tons of questions – Don’t be afraid to clarify guidelines or loan requirements
• Learn the red flags – Detecting fraud and risk is key
• Master your guidelines – Know conventional, FHA, VA, USDA, and jumbo programs inside out
• Build relationships – Interact regularly with processors, LOs and other stakeholders
• Continuously learn – Stay on top of policy and guideline changes
• Be detailed – Carefully verify every piece of a loan file
• Manage stress – Underwriting can be high pressure during crunch times

With sharp attention to detail, unwavering diligence, and a passion for helping borrowers, you’ll be well on your way to underwriting success.

Underwriting can be an extremely rewarding career. You get to help creditworthy borrowers achieve homeownership while managing risk for lenders. If you want a challenging role that combines analytical skills, finance, and working with people, mortgage underwriting may be the perfect field for you.