10+ Mortgage Underwriter Interview Questions and Answers

Red flags in loan applications

• Inconsistent or incomplete information

• Low credit score or history of missed payments

• High debt-to-income ratio

• Unstable employment history

• Undisclosed debts or liabilities

• Suspicious income sources

• Lack of collateral or down payment

• Previous bankruptcy or foreclosure

• Applicant's age or residency status

• Unverifiable information

Third party reports are necessary for mortgage underwriting. Examples include credit reports, property appraisals, and title searches.

• Credit reports provide information on the borrower's credit history and score

• Property appraisals determine the value of the property being mortgaged

• Title searches ensure that the property has a clear title and there are no liens or other claims against it

• Other third party reports may include flood zone determinations, pest inspections, and surv...read more

Rent roll and operating statements are used to complete a sizer.

• Rent roll is a document that lists all the rental units in a property, their rental rates, and occupancy status.

• Operating statements show the income and expenses of a property over a period of time.

• Sizer is a tool used to determine the value of a property based on its income potential.

• Execution of rent roll and operating statements is necessary to complete a sizer and make informed decisions about a property's va...read more

Net worth, LTV, DSCR, and Cap rate are important financial formulas used in mortgage underwriting.

• Net worth is the difference between assets and liabilities.

• LTV (Loan-to-Value) is the ratio of the loan amount to the appraised value of the property.

• DSCR (Debt Service Coverage Ratio) is the ratio of the property's net operating income to its debt service.

• Cap rate (Capitalization rate) is the rate of return on a real estate investment property based on the income that the proper...read more

The 4C of underwriting are Capacity, Credit, Collateral, and Character.

• Capacity refers to the borrower's ability to repay the mortgage loan.

• Credit evaluates the borrower's credit history and credit score.

• Collateral assesses the value and condition of the property being mortgaged.

• Character examines the borrower's overall financial stability and reliability.

• Example: A mortgage underwriter will analyze the borrower's income, employment history, credit report, property appraisal,...read more

Normal CPC behaviour refers to the expected behavior of cost-per-click advertising campaigns.

• Normal CPC behaviour involves a consistent cost-per-click rate for a given ad campaign.

• Factors that can affect CPC behaviour include competition, ad relevance, and bid amount.

• Abnormal CPC behaviour may indicate issues with the ad campaign or external factors such as click fraud.

• Monitoring and analyzing CPC behaviour is important for optimizing ad campaigns and maximizing ROI.

The question is asking for a reply within a specific timeline.

• Ensure to provide a clear and concise answer

• Highlight the importance of meeting deadlines in the mortgage underwriting process

• Give an example of how you have successfully replied within a timeline in a previous role

Income calculation for self-employed individuals involves analyzing tax returns, profit and loss statements, and other financial documents.

• Review tax returns to determine net income

• Analyze profit and loss statements to assess business income

• Consider additional sources of income such as rental properties or investments

• Calculate average monthly income over a specified period

• Verify consistency of income over time

DTI is calculated by dividing total monthly debt payments by gross monthly income.

• Add up all monthly debt payments including mortgage, car loans, credit card payments, etc.

• Divide the total monthly debt payments by gross monthly income.

• Multiply the result by 100 to get the DTI percentage.

• For example, if total monthly debt payments are $2000 and gross monthly income is $6000, DTI would be (2000/6000)*100 = 33.33%.

A mortgage is a loan used to purchase real estate, with the property serving as collateral for the loan.

• Mortgages are typically long-term loans, often lasting 15 to 30 years.

• The borrower makes monthly payments to the lender, which include both principal and interest.

• If the borrower fails to make payments, the lender can foreclose on the property.

• Interest rates on mortgages can be fixed or adjustable.

• Common types of mortgages include conventional, FHA, VA, and USDA loans.