What is Underwriting?

Underwriters are responsible for deciding whether a borrower's loan application is approved or not. If a potential borrower applies for a loan from a mortgage, insurance, loan broker or any other type of financial institution, it is an underwriter who evaluates risk presented by the entire loan application. As part of the underwriter job description, they review credit history, assets, the size of the loan, the appraisal of the home for mortgage applicants and medical history for insurance, and then decide whether to approve or decline the application based on the risk presented.

How to Become an Underwriter

The most common underwriter qualifications include having at least a bachelor’s degree in finance, business, economics, or mathematics. Advancing in this field typically requires underwriters to earn certifications through nationally-recognized organizations. While underwriting certificates can be obtained in as little as 1-10 courses.

Types of Underwriters

  • Insurance Underwriter
    • Assesses the risk for life insurance
  • Mortgage Underwriter
    • Most common type of underwriter
    • Manages loan applications for potential homeowners
  • Loan Underwriter
    • Often related to auto loans

Top Underwriter Skills

  • Compliance
  • FHA, USDA, VA, FNMA & FHLMC loans
  • Mortgage loans
  • Risk management
  • Analytical skills
  • Problem-solving skills

Average Underwriter Salary

Job Average Base Salary Years of Experience Minimum Credential Preferred
Mortgage Underwriter $78,012 0-2 Bachelor’s Degree
Sr.Mortgage Underwriter $95,074 0-2 Bachelor’s Degree

What Does an Underwriter Do?

The most common underwriter duties include:

  • Reviewing and verifying loan applications and supporting documentatio
  • Analyzing loan risk and requesting additional information as necessary
  • Defining the terms and conditions of the insurance coverage and the premium
  • Review loan documentation and vendor reports to identify signs of fraudulent activity
  • Making loan eligibility decisions and approving or rejecting applications
  • Communicating with loan officers and management to maintain a case-by-case follow-up for potential clients
  • Re-assessing risk when policies come up for renewal
  • When necessary, insurance underwriters request additional information beyond the application to ensure thorough and accurate evaluations

Job Outlook

While the Bureau of Labor Statistics (BLS) stated that employment of insurance underwriters is projected to decline 6% in the following years, skills like customer service, communication and making judgment calls on higher risk applicants through Loan Officer interviews, are factors why financial institutions have not completely transitioned the load to software-based solutions and will still require underwriters.

Similar positions

  • Actuary
  • Mortgage Loan Processor
  • Budget Analyst
  • Financial Analyst

Underwriter Career Path

Depending on the path, underwriters can become:

  • Senior Underwriter
  • Loan Supervisor
  • Financial Managers

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