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HomeTechAutomated Underwriting Software | Process Of Usage & Potential Benefits

Automated Underwriting Software | Process Of Usage & Potential Benefits

Automated loan underwriting increases loan providers’ profit margins by reducing manual underwriting labor costs while also improving client satisfaction. If a company is seeking an automated underwriting system, there are many reasons to believe it. Throughout the loan cycle, automated loan underwriting allows for digital verification processes. It completely automates the processing and underwriting processes, as well as the document generating process and digital delivery. The procedure enables real-time integration of all involved parties with the loan origination software(LOS) for data exchange between applications, as well as e-closing, recording, and vaulting options.

How does loan underwriting work?

Loan Underwriting is the process of evaluating a loan application’s quality and selecting whether or not to extend the loan. It entails evaluating dozens of distinct indicators in a credit report and determining the possibility of repaying a loan, which is more involved than merely looking at a borrower’s credit score/credit history.

There are a few different techniques for automated underwriting, but they all have one thing in common: borrower information analysis. Each course uses the same material, but it is examined differently.

What is the process of using automated underwriting software?

Underwriting software can be divided into two categories:

1. Software for pre-application

Pre-application credit underwriting occurs before an applicant submits a formal loan or credit application. Pre-application software is designed to assist lenders in weeding out high-risk borrowers so that they may concentrate their efforts on those who are most likely to repay their loans.

2. Software for post-application underwriting

After a borrower has applied for a loan or line of credit and been accepted or denied, post-application credit underwriting takes place.

The following steps were taken:

1) Checking the borrower’s credit record for accuracy

2) Obtaining soft credit information such as employment status, income, and length of employment at the present position

3) Using risk factors to determine if the interest rate should be increased or decreased based on the applicant’s score

4) Determining the total debt-to-income ratio

5) Making a preliminary decision on approval or refusal

6) Running the data through a fraud detection system (FDS) to look for irregularities, missing or erroneous data, and other issues.

What are the advantages of automated underwriting?

Here are a few of the advantages of an automated underwriting system:

  • Human mistakes or biases, which could lead to loan rejections, are eliminated with automated processes.
  • Pre-qualification is a quick and easy way for consumers to learn about their possibilities before applying for a loan.
  • The method helps to avoid loan fraud by identifying fraudulent applications before they reach the time-consuming human underwriting stages.
  • An automated system eliminates human mistakes and allows employees to focus on other activities such as selling products or attracting new clients.


Lenders can employ automated underwriting and loan document software to get a true pre-approval. Homebuyers should feel confident when looking for a home because they will be offered a mortgage if their information has not changed much and the expected purchase price has not altered significantly from the pre-approval.

Because the likelihood of final approval is high, automated underwriting is a valuable negotiating weapon with property sellers. After finding a home, purchasers should always get an updated loan pre-approval.


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