Old Credit Issues? Ask Your Lender to Manually Underwrite Your Loan

Dated: December 3 2020

Views: 224

Manual underwriting is how all loans were evaluated before computer algorithms took the human logic out of the process. Simply stated, a loan that is manually underwritten is one where a person evaluates the file for the borrower’s ability to make the loan payments. For those who have had credit issues in the past that are easily explained and understood, requesting a manual underwriter may make the difference between getting the loan or not.

Almost everyone has gone through difficult financial times at some point in life. Perhaps a divorce or job layoff caused a glitch in the otherwise good credit of the borrower. A computerized system only catches the credit score and number of late or missed payments. A good credit risk can turn into a poor one simply because a computer can’t understand the circumstances which caused the problem—but a person can.

How Does It Work?

Before an underwriter will approve a loan, they need to understand the borrower’s ability to pay and their overall financial situation. The loan package will include bank statements, tax returns, pay stubs, savings accounts, and other forms of verification.

The underwriter will review the provided documentation and any personal statement of explanation provided for negative records. They will consider not just the credit score, but also recent job promotions and special situations which explain a difficult period in an otherwise perfect record of on-time bill paying. In short, they can view the overall package from a human perspective and make a reasonable decision.

For anyone who has had a difficult financial history due to divorce, job loss, a death in the family, or failed business, asking for a manual underwriting review can prove their creditworthiness and obtain a loan that would otherwise have been out of reach. 

Blog author image

Sweet Magnolia Homes

Sweet Magnolia Homes brings a local knowledge to the markets we serve that has been obtained from years of living and working in Atlanta and the surrounding suburbs. This means our agents are intima....

Latest Blog Posts

Seller’s Guide to Buyer Contigencies

Every news article talks about the fact that it’s a “seller’s market.” This means that if you are selling your home, you’ve probably gotten a few offers from which to

Read More

Fall and Holiday Décor Listing Tips

If you have your home on the market, it’s natural to want to create the perfect environment for potential homebuyers. This includes not only professional staging services but also time-honored

Read More

What Might Your Homeowners Insurance NOT Cover?

Here is a rundown of a few perils or occurrences that can happen to your home that your basic homeowners insurance policy will most likely not cover. It's important to know what is covered, and what

Read More

Organize Your Garage

Don’t wait for spring to do some deep cleaning. Winter is coming and fall is a great time to prepare your home against the harsh winter conditions and hazards it can bring. A clean garage will

Read More