Having trouble in the underwriting process? A FHA manual underwrite could be a good option for borrowers having issues getting approved by the automated underwriting system.
FHA manual underwrite refers to the process of manually reviewing and evaluating a mortgage loan application that does not meet the standard automated underwriting guidelines.
FHA loans are popular among homebuyers, especially those with lower credit scores or smaller down payments, because they offer more flexible qualification criteria compared to conventional loans. However, many FHA loans go through an automated underwriting process, where a computer program assesses the borrower’s creditworthiness based on factors like credit score, income, debt-to-income ratio, and other financial information. If a loan application doesn’t receive an approval through this automated process, it may be referred to a manual underwriting.
Manual underwriting involves a human underwriter carefully reviewing the borrower’s financial documents and other relevant information to determine if they are eligible for an FHA loan. This process can be more time-consuming and thorough than automated underwriting, as it takes into account additional factors that might not be considered in the automated system.
Manual underwriting might be necessary if the borrower has complex financial situations, non-traditional credit history, or other factors that cannot be easily evaluated by an automated system. It allows the underwriter to use their judgment and experience to assess the borrower’s ability to repay the loan and make a decision based on a more holistic view of the borrower’s financial situation.
It’s worth noting that while manual underwriting provides more flexibility, it can also be more stringent in its requirements. Borrowers undergoing manual underwriting might need to provide more documentation and meet higher standards to be approved for an FHA loan. While this could be more time consuming, it might be a great option if a borrower isn’t able to close otherwise.
Having trouble in the underwriting process and feel like a manual underwrite might be a good option for you? Speak to one of our qualified loan officers today to discuss your options on your specific scenario!