What is a Mortgage Underwriter?

A mortgage underwriter is an insurance professional responsible for evaluating the risk of a mortgage application, from the financial institution perspective. In this job, the mortgage underwriter is responsible for determining the maximum amount of mortgage granted. A mortgage is a long-term loan used to finance the purchase of a home or property.

Underwriting was developed by Lloyd's of London insurance company to mitigate the risk of ship loss for a fee. This type of policy expanded as a way to allow financial companies to have security against financial loss. The process of mortgage underwriting is found in North America, Europe and parts of Asia.

There are three tasks that a mortgage underwriter completes each day: evaluate mortgage applications, determine total mortgage amount, and create risk analysis reports. Mortgage underwriters are employed by the financial or banking institution directly and generally work standard banking hours. Although some mortgage underwriters work from home offices, the vast majority work in an office cubicle.

When the underwriter receives the mortgage application, she looks at the total reported household income, down payment amount, and purchase price of the property. A series of calculations are performed to determine if this request falls within the acceptable range of risk, based on the standard criteria of the lender. A computer software program now performs these calculations.

The total amount of mortgage granted is based on the information provided by the applicant and the guidelines used in the computer program. The mortgage underwriter can adjust this value based on the forecasted value of the property, economic climate and other factors. Banks and financial institutions adjust their levels of acceptable risk all the time, balancing profit opportunities and risk to the institution.

Risk analysis reports are required within every financial institution to determine the total investment value and exposure to financial loss. The review and summary of these reports are used internally to adjust the lending criteria. They are also used to evaluate the job performance of the mortgage underwriters and loan officers.

A career as a mortgage underwriter is fairly stable, as only major shifts in the economy have a negative impact on property sales. Career advancement opportunities are usually limited to management positions in mortgage underwriting. Many people complete additional courses to expand into other types of underwriting, which increases their career options. Underwriting is a numbers-based career and requires both attention to detail and computer skills to be successful.