10 Steps How To Become A Mortgage Underwriter

(doylc.com) How to Be a Mortgage Underwriter - A mortgage insurer works with mortgage lenders and loan processors to determine whether a borrower's home loan application will be approved and on what repayment terms. The underwriter determines whether a borrower poses an acceptable level of risk based on established guidelines and criteria related to their credit usage and history, their ability to repay the loan, and the collateral securing the loan. The Bureau of Labor Statistics (BLS) projects an 8 percent growth in the loan officer employment category, which includes mortgage insurers, between 2012 and 2022.

• How To Earn Education a Mortgage Underwriter

1. Take relevant high school classes. There is no single career path to becoming a mortgage underwriter, but there are important courses that can prepare you for a position in this field. It's never too early to start studying math as you need to master math and data analysis to become a successful mortgage underwriter.

The best preparation for a career in mortgage insurance is to take as many accounting and math courses as possible.

2. Apply to college . Most schools do not offer a specialized mortgage insurance degree, but mortgage companies and banks tend to seek specific educational credentials from mortgage underwriter applicants. Knowing what courses and majors to study can put you in a better position as a mortgage insurer.

Loan officers such as mortgage underwriters are typically required to earn a four-year bachelor's degree.

Many mortgage insurers have a business or finance major. However, there are no set requirements and many successful applicants had other majors but took extensive courses in accounting, business law and insurance.

3. Do an internship. Many banks and trading groups in the banking industry now offer interested students and graduates internships of varying lengths. You must actively seek an internship and there can be stiff competition from other interested students.

Look for internships by searching online for banking, investment, or credit analyst internships. You can also contact a banking institution or trade group in your area directly by searching for them online.

The Massachusetts Bankers Association runs a summer internship program that immerses college students in the world of financial banking.

Similar opportunities exist for college graduates. RBS Citizens (part of Citizens Financial Group) offers a year-long training program that combines classroom study in finance and credit analysis with rotating positions at the bank to give trainees a thorough introduction to all aspects of commercial banking.

4. Earn a degree. Once you have earned a four-year bachelor's degree, either in business/finance or another degree with relevant coursework, you are eligible to apply for most mortgage insurance positions. However, you need extensive on-the-job training before you can become a certified loan officer.

• How To Get Education and Experience A Mortgage Underwriter

5. Apply for assistant/trainee positions. Before you can become a full-fledged mortgage insurer, you need to gain initial experience and training. Most entry-level positions for university graduates are trainee or assistant positions.

Most mortgage insurers work for banks, credit unions, or mortgage brokerage firms.

Find entry-level mortgage underwriter jobs online. You can use sites like Monster.com or Indeed.com, or you can apply directly to companies by searching for financial institutions in your area.

Assistant or trainee positions often lead to jobs, either in the office where you trained or through connections made in that position.

6. Acquire on-the-job training. Apprenticeships typically last a year or less, with many apprenticeships only lasting a few months. This training is necessary for fresh graduates to be experienced in the day-to-day world of mortgages and finance.

Training can include informal training, formal training sponsored by the company or organization you work for, or a combination of both.

If your firm or business uses underwriting software, you will need to take courses and gain experience working with that company's specialized software programs.

Try to build strong connections with colleagues in your entry-level position. Networking is a great way to find jobs in the future, either after you graduate or when you're ready to step up into a new position.

7. Consider getting certified. Although certification is not a requirement for employment, professional certification can increase an employee's salary by five to ten percent. In the United States, the National Association of Mortgage Underwriters (NAMU) is the premier body for mortgage underwriters seeking certification. NAMU offers two primary certification options:

Certified Mortgage Underwriter (NAMU-CMU) - This certification option requires 12 hours of training. The candidate must then score at least 85 percent on a 30-question exam and successfully pass a criminal background check.

Certified Master Mortgage Underwriter (CMMU) – This certification option is considered an advanced degree and requires 24 hours of training. The candidate must achieve at least 85 percent of the core on a 30-question exam and successfully pass a criminal background check.

• How To Building a Career A Mortgage Underwriter

8. Know what is expected. A career in mortgage insurance will involve a lot of financial risk analysis. Most day-to-day tasks involve reviewing applications and conducting an in-depth analysis of the proposed loan package. Common risks that are predicted and assessed include:

Interest Rate Risk - This includes the potential losses that can arise from fluctuating interest rates.

Default Risk – This focuses on the risk that a potential borrower will default on their loans if they are unable to repay their debts.

Prepayment Risk – This risk requires the underwriter to speculate on the likelihood that the borrower will prepay their loan before it is due. In this case, the borrower effectively cuts the lender's interest payments that would otherwise have accrued.

9. Learn how to underwrite a mortgage. In order to analyze a prospective borrower's loan application, a mortgage underwriter must review the borrower's credit reports and income history, which may require payslips and/or W-2 statements. The mortgage insurer uses this information to calculate the borrower's debt-to-income ratio.

The debt-to-income ratio is calculated by adding the borrower's monthly liabilities (mortgage payments) to their obligations (monthly loan and loan payments) and dividing that number by the borrower's net monthly income, including recurring financial obligations such as child support or child support.

Any ancillary assets such as checking/savings accounts, pension funds, mutual funds, and stocks are also factored into the equation to determine whether or not the prospective borrower would be at high risk of default.

10. Specialize your skills. Once you enter the mortgage insurer field, there isn't much room for advancement beyond a manager's position unless you have earned a master's degree in a related field. For this reason, many mortgage insurers choose to develop advanced skills in specialized lending systems.

Common loan schemes include Local Authorities Pension Plan (LAPP), United States Department of Agriculture (USDA), and Federal Housing Administration (FHA) loans.

These lending systems are highly specialized and require a unique knowledge of lending rules and regulations. Skills are typically developed through continuing education courses regularly offered by professional mortgage organizations such as the National Association of Mortgage Brokers.