Apply for a Loan: 3 Questions Underwriters Ask

3 Questions Underwriters Ask

In addition to looking at your debt-to-income ratio and credit report, there are several other considerations underwriters take into account when reviewing your loan application. In this third and final part of our “Apply for a Loan” series, look at three additional questions underwriters ask.

1. How stable is your income?

If you’ve been at your current job for longer than a few years, that’s a positive indicator for underwriters. If your employment and income change a lot, that’s not a positive indicator.

2. Do you have any collateral for the loan?

For auto loans, the lender will keep the title to your car. If for some reason you can’t make your payments, the lender can take back the car and sell it to make up for any losses they may take. For credit cards, there’s no collateral, so the lender’s risk is much higher. This makes those loans harder to qualify for.

3. Do you have a cushion of money set aside in case you lose your job? 

Lenders like to see you have money set aside in savings accounts, retirement accounts or other investments. Having money saved shows that if a loss of income or unexpected expenses occur, you’ll still be able to make your loan payments.

Read previous installments of this series: Calculate Debt-to-Income Ratio and 4 Credit Report Rules.

Do you have more questions about how underwriters review your loan application? Leave your question in the comments section below.

Author Ray Lindley

Read Ray’s blog for advice on applying for loans, your credit score and lending trends. As Chief Lending Officer, Ray leads Elevations’ consumer, retail, mortgage and business lending operations, and keeps a sharp eye on industry trends and lending news for the No. 1 credit union mortgage lender in Colorado.

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