Underwriters Get Personal

I’ve never been clear what an underwriter does.  But now I am. They analyze your expenses and income to determine if you are a risk to the lender.  I am buying a house and deep in the process. I’ve long been approved.  The appraisal has been made and the inspection and repairs finished.  A close date is established, and it’s right around the corner.  But “underwriting” is still assessing the documents.  I put “underwriting” in quotations because it’s been a mystery for a long time.  Throughout my house search for the past few years, as I’ve delved into the possibilities of selling and buying, I’ve heard the term a million times: “I’ll have to let underwriting make that decision” or “Lets see what underwriting says.”  I’ve had the feeling of the lender with whom I’ve established a relationship, and the underwriter in the back room going back and forth.  Lender: “But look. She pays her bills on time. She’s really nice, and I can tell she’s responsible. She’s got a letter of reference!”  And the underwriter: “Yes, but what about this? She bought a pair of shoes in March and returned them in April. She’s too fickle for a loan. We can’t trust a woman like that!”

Granted, I’m not a slam dunk decision.  I wish my financial complications were as simple as buying and returning items.  In the last five years my financial climate has slowly improved.  But underwriting isn’t only looking at income.  They look at my debt history, both previous to my divorce, and in the last five years when I’ve been on my own.  They look at divorce decree documents, too.  They talk to banks and credit unions.  They get very personal.  I get all that.  But even with evidence of my personal solid track record, they scrutinize and monitor my cash flow behavior up until the very end!  After they received my bank and investment statements, they wanted them again after I showed the withdrawal and then deposit of my down payment, complete only with proof of deposit.  Then, they spotted a $16,000 deposit.   They wanted to know what that was.  I told my mortgage broker it was for a drug deal, and of course I had no proof of that transaction because I only accept cash for those.  I couldn’t resist.  It was for the sale of my Yukon Denali, for which I purchased a newer car with 70,000 less miles, double the gas mileage, for less money than I got for the Denali. That should impress them!

It’s kind of interesting.  Don’t we all wonder what people do with their money at times?  We see a Mercedes in front of a house of ill repair or a friend sends their children to private school but the parents hold a profession that isn’t known for a high income.  We can’t help that it crosses our mind.  Probably because we want their secret.  But asking people about their finances is personal, and we really should stay away from it.  The truth is, we don’t know about people’s finances based on their lifestyle or expenses.  However, if you do want to know, become an underwriter.  Then you can ask any question you want, and you can even ask for proof!

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