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Importance of Pre-Underwriting for Wholesale Lenders
The lending industry has rapidly evolved in the past decade, especially after new rules and regulations were came into being after the 2009 housing market collapse. Wholesale mortgage lenders who make the final crediting decisions while also fully funding a mortgage loan have also seen their business get affected because of such changes.
Today, the wholesale lending space is becoming increasingly competitive, and lenders are frequently faced with the following questions while trying to chart out their business's future goals -
What recent mortgage lending options will allow them to enhance company performance and productivity?
Which options will help them save time and costs?
Which option will help them expand their operations?
Pre-Underwriting: Changing the Way Wholesale Mortgage Lenders Conduct their Business
One of the major differences between wholesale mortgage lenders and mortgage brokers is that lenders not only have access to readily-available funds but also have the underwriting authority to disseminate such funds as they choose. For such wholesale lenders, Pre-underwriting not only allows them to put a mortgage application through a more thorough initial validating process, but perform most of the important functional due-diligences even before the initial contract is up.
Another reason why pre-underwriting is of a big help is that it also enables home buyers compete better with other cash buyers, who otherwise always tend to get the best deal especially when many people are interested in the same deal.
Pre-Underwriting and the Mortgage Loan Underwriting Process
A pre-underwriting process is one of the best ways to identify proper qualifying factors, or the lack thereof, for a mortgage loan application. In fact, most home buyers are getting themselves pre-qualified much before they start hunting for a home just so they can be in a better negotiating position. At the same time, pre-underwriting also helps prevent the wastage of precious resources by removing submissions from the loan application pipeline which are impossible to get funded. This means wholesale mortgage lenders can have a more efficient mortgage loan underwriting process when the time comes, without having to focus on applications which wouldn't have made through eventually.
Outsourcing mortgage lenders pre-underwriting process therefore can help you achieve better efficiency, while allowing you to save on costs in these testing times. Your pre-underwriting service partner can easily take over your preferred LOS/boarding system so as to pre-underwrite buyer applications and help you save considerable
The best way to maximize the results from pre-underwriting your loans is to outsource this task to a qualified Loan Pre-underwriting Service provider. This type of mortgage servicer specializes in quick pre-underwriting procedures and is specifically set up to perform this task accurately and efficiently. The pre-underwriting contractor can merge seamlessly with your preferred LOS or boarding system and rapidly deliver fully pre-underwritten loans without causing delays to your normal approval process. Some of the tasks an authorized pre-underwriter can perform for you include -
File reviews for applications
Validate LP/DU or use your own AU system
Perform thorough fraud analysis
Open related appraisal, title, and insurance orders
Properly initiate VOE and VOD verifications
Advantages of Pre-underwriting
There are many inherent benefits of mortgage pre-underwriting for wholesale lenders, including -
Prospective buyers are better aware of how much financing is potentially available for a property. As a result, since investors directly know the upfront costs, loan amount, and loan rate that is expected to be associated with the property, the property evaluation also gets a significant boost.
The pre-underwriting mortgage process also helps to validate a property's asking price by using market capitalization rate to actually determine a property's value. This data is obtained from various sources, including property appraisers. This further helps determine whether or not a property's income will support a loan for a determinate percentage of the property's asking price. Furthermore, such a practice can help weed out inaccurate or false listings, while allowing buyers to be more comfortable during the bidding process.
Pre-underwriting is of great advantage to wholesale lenders who end up having to negotiate listing prices with home owners who feel their properties are worth significantly more than their actual value
Pre-underwriting mortgage processes can also help evaluate an undeveloped lands' listing. This is done by factoring-in other additional data sources such as market vacancies, incentives, lease-up times, etc. Therefore, construction costs for that particular land, as well as vacancy data can be easily determined with the help of a thorough pre-underwriting process
Finally, by partnering with suitable pre-underwriters, wholesale mortgage sellers can reduce the on-market-time for all their land investment listings, while considerably enhancing the odds of closing a particular sale.
Flatworld Solutions - The Best Home for all Your Pre-underwriting Needs
At FWS, we strongly believe that pre-underwriting is one of the best ways to reduce your wholesale lending center's average costs incurred per loan. This in turn will not only help you improve your diminishing bottom line, but free up crucial tasks which need devoted attention from your underwriters.