Many lenders have converted their underwriting systems to an online automated program where Brokers can upload applications over the internet and receive approvals and conditions often within minutes. Not only does this improve customer relations as customers receive legitimate responses within minutes, but it often saves the time and energy of the brokers and Lenders involved, allowing a higher volumn of business within a reasonable time frame.While online, automated underwriting systems may offer the benefit of speed and efficiency for mortgage brokers, lenders, and most importantly the customer, it very important to understand that there is still room for error.
As a client, it is important that you give the mortgage broker as accurate figures and facts about your personal and financial situation to ensure that if an approval is issued by an automated system that the approval can also be validated by a manual underwriter.
Modern Automated Underwriting systems also allow us to close loans more rapidly than ever before.
The main benefits of automated underwriting are that high quality loans may require less stringent documentation as part of their approval. This presents a benefit to high quality borrowers as a "streamlined approval" is easier to approve and clear for closing. Borrowers who have a large down payment or strong equity position in their property, strong asset reserves, and other compensating factors may be able to qualify for "Fannie Mae" rates even if their credit rating or debt to income levels fall just short of typical minimums. Be sure to inquire with your mortgage professional about their automated underwriting systems and how it can improve the efficiency and possibly cost of your loan.
As with most things, there can be advantages and disadvantages to automated or computerized loan underwriting. Obviously, with automated underwriting decisions are made solely on the basis of the information submitted without regard to the individual moods or predjudices that could be possible with human underwriting. By the same token, if there are special circumstances or compensating factors that should be considered, a human analysis is often the only way to make those kinds of considerations.
With the use of automated underwriting systems, many times compensating factors can help contribute to a loan being approved that may not have been approved through regular conventional human underwriting. For a conforming conventional loan usually a total debt to income ratio of 36% or less is the approximate guideline to qualify for a loan. With the use of automated underwriting systems, sometimes loans may be approved with debt to income ratios that are much higher. Debt to income ratios that are between 50 and 60 percent are commonly approved with automated underwriting systems.
