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

Dated: December 3 2020

Views: 181

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

Stay Focused on Your Housing Goals

Buying or selling a home can be stressful, even in normal times. Right now, when the housing market is moving at a frenetic pace, both buyers and sellers are making quick decisions and are feeling

Read More

Top Trends for Your Outdoor Living Space

Summer is here and you’re spending more time outdoors. For most of us, this still means primarily in our own backyards. Personal outdoor space has never been more popular and if yours could

Read More

MAKE YOUR HOME STAND OUT THIS SUMMER

June, the official start to the summer, which means one important thing - home selling season is upon us. With the kids home from school and vacation time accumulated, both buyers and sellers are

Read More

HOW TO DECIDE IF YOU SHOULD REMODEL OR MOVE

1. Determine which is more cost-friendlyWhile both options will have costs, one will have more than the other depending on your situation. Some of the costs of selling include agent commissions,

Read More