What is a mortgage underwriter?
Behind every real estate purchase, important financial work takes place to ensure the buyer can pay the seller. In many cases, this is done with a loan that requires a bank to give someone the money to purchase property and assigns a timeline for them to pay it back. A mortgage underwriter is a position that makes sure that payback can happen.
Mortgage underwriters are financial specialists who assess a lender’s financial risk as a potential borrower and approve or deny mortgage loans based on that risk assessment. Mortgage underwriters investigate a borrower’s credit history, order home appraisals, verify borrower income and employment, review debt-to-income ratio, confirm down payment and savings account information, and ensure all paperwork is submitted correctly based on current underwriting guidelines for loan approval. They may also request modifications to the application by submitting a statement explaining their decision.
A typical day for a mortgage underwriter will include authorizing and underwriting loans and analyzing the risks. There are also reports on assessment findings that need to be prepared and documentation and communication of the reasons for approval or rejection. Underwriters must stay up to date with company policies, guidelines, and loan conditions to maintain compliance.
Qualifications and eligibility
In order to become a mortgage underwriter, it’s good to have a bachelor’s degree from an accredited college or university. Many degrees apply to this field because it mixes a few major industries together. A degree in finance, business, economics, mathematics, or something related would be best. Getting experience in the mortgage underwriting and lending field is also important.
In addition to education, candidates for this career path must be highly organized, able to prioritize, and very detail-oriented. An analytical mind is also critical for this role since this person is the one calculating risks using the information provided to decide if the loan should be approved.
Having a working knowledge of the mortgage loan process and legal regulations is helpful. The process can be complicated with all the different loans and mortgage types available. Knowing the details and guidelines of FHA, USDA, VA, and conventional loans will also be important for this role.
Mortgage underwriters spend most of their time in an office at a computer. The work requires a lot of entering and analyzing data. There will occasional meetings with agents, which can happen in person, over the phone, on video chat, or via email.
Most of the work will be local, but there may be some opportunities to get out of the office, depending on your location and position. Some mortgage underwriters travel to attend meetings, and conferences, assess properties, meet with other financial professionals, or meet with clients. Occasional site visits can pop up as well.
Typical work hours
Mortgage underwriters work a very regular schedule during normal business hours. It’s typically Monday through Friday between 9:00 AM and 5:00 PM. Additional overtime or long hours may occasionally be required if an important deadline is approaching.
Earning potential for mortgage underwriters can vary based on geography, education, experience, and responsibilities. Here are some basic stats on the position:
- The top-paying locations for mortgage underwriters include New York, New Jersey, New Mexico, Pennsylvania, and Arkansas.
Steps to becoming a mortgage underwriter
1. Get a bachelor’s degree
While it is possible to get an entry-level job as a mortgage underwriter without a degree, the majority of positions require at least a bachelor’s degree. Get a degree in finance, business, mathematics, or something similar from an accredited college or university.
2. Consider taking the Mortgage Loan Originator Test
States require that mortgage officers pass the National Mortgage Licensing System and Registry (NMLS) exam. Most bachelor’s degree programs don’t include specific information about mortgages and this process. Mortgage underwriters don’t necessarily need to be licensed, but it can be a big benefit. The U.S. Department of Housing and Urban Development and state departments all have their own unique requirements, so being licensed can cover all of them.
Each state has different requirements about how many hours of coursework you do. Usually, 20 hours is the minimum. This coursework will help you prepare for your exam and gain all the tools you need to work with clients once you land your first job. The test itself has just over 100 multiple-choice questions. It covers general mortgage knowledge, federal mortgage-related laws, loan origination activities, ethics, and more. The test has a pass rate of just over 55%. If you don’t pass the first time, don’t give up. Many people retake and pass the second time with additional study time.
3. Obtain additional certifications and education
Certification is an important step in the process of becoming a mortgage underwriter. It shows that you’ve completed additional training. Here are the top three certifications available for mortgage underwriters:
- Credit Analyst and Real Estate Underwriting Training – Start with a course that dives into the basics of the process, like this Udemy course about becoming a mortgage underwriter. You’ll review test cases and work through a complete real estate analysis to understand the process.
- Certified Residential Underwriter (CRU) – This has become the standard for excellence in mortgage loan underwriting. The CRU is administered by the Mortgage Bankers Association (MBA). There are three different levels of certification available. The basic level proves your entry-level skills and earns you the Residential Underwriter Achievement Certificate. The intermediate level earns you the Residential Underwriter Professional Certificate. Once you’ve completed those, you’re eligible for the advanced level of the CRU Specialist Designation. Everything can be completed online, including exams.
- Certified Mortgage Underwriter (CMU) – The CMU program is designed for entry-level residential mortgage underwriters looking to advance their careers. Sponsored by the National Association of Mortgage Underwriters (NAMU), this program demonstrates your knowledge of underwriting essentials, FHA/VA underwriting, and manual underwriting. The course provides real-world lessons to help you gain the practical skills you need. The certification must be renewed yearly by taking an exam.
- Chartered Life Underwriter (CLU) – Offered by the American College of Financial Services, this certification is designed for underwriting professionals interested in insurance underwriting. Candidates gain a solid foundation in the fundamentals of insurance and estate planning, life insurance law, income taxation, and investments. Take the program online at your own pace. Once you’ve completed eight courses, passed the exams, and met experience requirements, you’ll get certified. Renewal is required every two years.
4. Apply for jobs
Once you have the knowledge base to be a successful mortgage underwriter, you can begin applying for jobs. Utilize online resources to find job postings. Reach out to your network on LinkedIn, especially if you have any connections at banks and financial institutions.
5. Continue training and education
Laws and regulations are constantly evolving and changing. Mortgage underwriters need to stay on top of those movements. Continuing education is a great way to advance your career and make sure you are up-to-date on the most current processes and guidelines.
Most of the certifications require updates and renewals at least every two years. Make sure to stay on top of those and take the updated courses. Take advantage of any chances to attend conferences and conventions. Those great networking events usually have a packed schedule of speakers and educational opportunities.
Types of mortgage underwriters
Loan underwriters assist with many types of loans. Mortgage underwriters specifically look at mortgage loans and can work with commercial and residential transactions. A few specific mortgage underwriter roles deal with certain types of specialty loans. Options might include a residential mortgage underwriter, a conventional mortgage underwriter, or a commercial mortgage underwriter.
In addition to mortgage underwriter positions, there are other positions that work in the same area but have roles that are a bit different. The mortgage broker is an independent liaison between the mortgage company and the customer. Loan officers work closely with customers throughout the loan process and help gather documents and seek out new clients. And a mortgage loan collections officer works with people who are late on their mortgage payments.
Tips for becoming a mortgage underwriter
For those planning to become a mortgage underwriter, you can do a few things to help put yourselves in the best position to be hired into this role. Here are some tips:
- Stay informed on current real estate trends and changes in the market, so you know what’s happening within the industry.
- Read up on reviews of different loans and financial institutions. It’s good to understand how customers are feeling about their loan application experience.
- Look for internships and entry-level positions at a bank to gain experience.
- Study credit reports and credit histories to practice and get comfortable with these documents’ ins and outs.
- Ask to shadow any senior underwriters to understand their role better.
- Take certification courses and continuing education opportunities to add to your resume.
- Check the National Mortgage Licensing System to learn more about the requirements and licenses needed for desired positions and anything you may pursue in the future.
- Get passionate about financial data and numbers.
- Understand the impact this role has on people’s lives and the success of a financial institution. Risk assessment is a major part of this role, which involves understanding people’s ability to repay their loans.
The last several years have seen a change in the home-buying experience. With the rise in remote work, the trend toward relocation out of centralized urban areas, an increase in online options, and the deployment of artificial intelligence applications, mortgage underwriters are finding new ways to fulfill the home-buying experience. Streamlined, simpler applications are in demand by consumers, whether that be online or through a mobile app. As online banking has become quick and easy, home buyers are looking for the same experience when applying for a home loan. Electronic applications are replacing face-to-face meetings with realtors, appraisers, title searchers, notaries, home inspectors, and lenders.
Virtual loan officers, digital mortgages, voice assistants, and crowdfunded mortgages are here to stay as the wants and needs of the customer are evolving. The mortgage companies that are able to change with consumers and meet their demands will be the most successful.
As home prices continue to rise, many potential buyers are being priced out of the market. Those who have homes are finding quite a bit of equity in them. This means those homeowners looking to renovate or put in a new pool have that option. Those who qualify for the best interest rates may also be in a good position to refinance.
After obtaining a college degree in a relevant field, graduates can jump into entry-level underwriting jobs. These exist in banks, credit unions, brokers, and other financial institutions. These positions typically include processes, regulations, and industry computer software training.
Mortgage underwriters can advance to higher positions with more responsibilities and more complex loan applications. Certifications can help move people up the system and expand overall knowledge.
Career advancements are possible in management and senior-level executive roles as well. Obtaining a master’s degree or advanced graduate degree may be necessary to reach those levels.
Mortgage underwriter interview questions to expect
1. How do you stay up-to-date on mortgage industry trends?
Share some of the sources where you get your news. Are you subscribed to any real estate publications? Do you have sources that you trust online? It’s important to stay in the know about the constantly evolving market, and you should be prepared to talk about some of the most recent shifts.
2. What are the most important places to look for data about a loan applicant?
This should be an easy question for anyone that’s had any training in mortgage underwriting. Include all the common resources, like credit reports, data from financial institutions, and other databases you are familiar with.
3. Which tools do you use to organize and analyze financial information? Do you review it in a specific order?
Everyone has a method that they use to organize. Because you are faced with an extremely large amount of data, companies want to hear about your processes. Let them know that you’re also open to new ideas and processes that they utilize in their organization.
4. Are there any red flags you look for when reviewing an application?
Cover the basics like credit issues, social security discrepancies, strange identity issues, and debt-to-income ratios. This question gives you the chance to showcase your knowledge of the underwriting process.
5. Give an example of a loan that you denied.
Come prepared with a few real-life examples from your experience in the industry. Try and pick something unique that will stick in their heads after your interview. If you don’t have one, you can talk about examples you’ve seen in your coursework.
6. Have you ever had an application that you were on the fence about? How did you make your final decision?
Similar to the question above, this is the chance to either share some of your experience and knowledge or talk about interesting scenarios that you learned about while getting your degree or certification.
7. What methods do you use for self-employed or freelance applicants?
More and more people are moving to the freelance space, and it’s important for the mortgage industry to have methods in place for validating their income information. Make sure you understand how income reporting works for freelancers and self-employed people.
8. Describe your method for checking your work and reviewing your decisions before finalizing.
Share your process for verifying your work. Do you check everything over once or twice? Do you return to the financial information and verify that you entered all your numbers correctly? Tell your potential employer how careful you are about accuracy, and make sure they trust that you don’t rush through things.
9. What do you love most about real estate?
Let them get to know you a little more with your answer. Do you follow Zillow Gone Wild on Instagram because you love seeing all the funky properties for sale? Do you own any investment properties or hope to in the future? Talk about what you love about the industry and showcase your passion.
Mortgage underwriter FAQs