Loan Underwriting Process: What Is It And How To Speed It Up

Underwriting is a process of assessing the risk of giving a loan to an individual. Using the loan underwriting process, a lender determines whether or not the borrower is capable of paying the loan back. Underwriting is performed before approving a loan application. From collecting documents to analyzing them, there are many things that make it a long and time-consuming procedure. Learn how you can speed it up.

When you apply for a loan, a bank or the borrower ensures that you are able to pay the borrowed amount. It collects different types of documents to determine your income, credit history, and financial situation to know whether or not you can be trusted for the loan repayment.

During the commercial loan underwriter process, you are asked to submit different types of documents. Delay in submitting them can lead to more time in loan approval. However, many banks and lenders use automated loan underwriting solutions today. 

What is Automated Underwriting

Earlier, lenders were carrying out underwriting manually. There were experienced professionals to collect documents and related information on a potential borrower. After that, those experts processed the collected data manually to determine whether to proceed with a loan application or not.

Since underwriting is not the only step in a loan approval process and multiple other steps are also involved, delay in underwriting can affect the speed of other steps. Apart from delay, manual underwriting resulted in human errors. 

To eliminate the problems, many lenders use automated underwriting systems. These are advanced systems that perform tasks like checking credit history and determining a potential borrower’s financial situation. These systems help in asset-based finance factoring and offer a range of benefits. They include:

  • Reduced Risks

When an automated system is used for loan understanding, there are fewer chances of errors. Automated credit risk results and red flag alerts ensure that all the steps of underwriting are followed without leaving scopes for errors. 

  • Speed

As all the tasks are performed automatically, the automated system speeds up the process. From checking documents to analyzing them for risks and LOS system, several actions are performed automatically.  

  • Increased Productivity

The automated system reduces the manual work, which gives more time to a lender to perform other essential tasks. In addition, the software solution provides all things in one place to quickly perform many tasks and speed up the loan approval process. 

  • Improved Turnaround

Although the loan underwriting process isn’t the only part of a loan approval process, many other steps depend on its results. By quickly performing the underwriting process using an automated system, more time can be given to other processes. This leads to quick actions on a loan application. 

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In the End 

Underwriting may be a lengthy and complex process, but the best automated loan underwriting software solution can improve it and offer quick results with minimal errors. Get the best software solution to simplify loan underwriting.