Real estate underwriting is a process a lender uses to look into a potential client during the loan application period as well as when determining whether or not to insure a client. The underwriter will likely also conduct a thorough title search to better ensure no one else has any claim to the property that is under consideration.
It is wise for a lender or business to complete this process as a part of their due diligence before moving forward with a real estate deal because it provides a type of safety net to help better ensure the transaction moves forward smoothly.
What type of information do underwriters use to complete the process?
Underwriters will gather various information from the applicant, including their financial history, credit scores and employment history. This professional may also order the appraisal of the property and use the information to determine if the amount requested to purchase the property is appropriate. If the appraisal finds the property is not worth the requested funds, the underwriter may not approve the applicant’s request.
How has the coronavirus pandemic effected real estate underwriting services?
Buyers have changed how they are viewing the asset. For rental properties, for example, buyers are expecting higher vacancy levels and planning to hold off on upgrades for the first year or two. However, since many lenders have been lending throughout the pandemic period the overall impact has proven minimal thus far. Although the terms may change, lenders and financial institutions are still making deals, helping to keep the market moving forward even in the midst of the pandemic.