What is Desktop Underwriter (DU) and What Does It Mean?

Filed under: Qualifying for a Mortgage Loan, Tips for Realtors

Today, our topic is heavily focused on real estate: we are talking about Desktop Underwriters, also known as DU. I wanted to talk about this topic today because DU just released a new version, and the upgrades look like they will be a great addition to the industry.

What is DU?

A desktop underwriter is a software program by Fannie Mae that analyzes a loan application, including the credit report and all of the asset documentation. When someone applies for a loan, we run all of that information through DU, and it provides us with an automated approval or denial of the loan application.

From there, all the underwriter has to do is to verify the information that was input into the system. Once these details are verified (along with the appraisal and a few other items), then the loan receives final approval.  DU is great tool, however, to enable us to obtain pre-approvals.  Freddie Mac also has a similar program, called Loan Prospector (LP).

Why is DU Important?

One of the big things that I do on a daily basis is provide pre-approvals to homebuyers. We need this information to be very accurate, helping potential buyers to know if they have financing for a home they want to buy. In this process, I work with the buyers to get the necessary information, then I run everything through the system and provide details to the real estate agent about the DU findings and the pre-approval letter.

DU is important because it gives you an early indication of whether or not the loan will be approved.   As already mentioned, there are a few other elements that also need to fall into place, such as the appraisal, but the DU findings can give all parties the peace of mind to know that there is a low risk of financing problems in the closing.

DU is Only as Good as the Information that is Input

Keep in mind that this system is only as good as the information that is entered into the program. So, it is up to each buyer to provide accurate details so that we can provide a fair assessment of the financial situation.

If a buyer or a lender provides you with a copy of the DU results in order to bolster their offer, it is important to look at the details in the report and clearly interpret the findings. Take a peek at the findings to look at details such as income or assets, to ensure that it might actually be a number that was calculated. For example, a rounded number such as $10,000 of income per month or assets of $100,000 might be red flags because there is the likelihood that the person estimated the numbers instead of providing exact details.

We have found that DU is a great tool to help our listing agents vet out potential buyers. My team is happy to help if you are looking for information from a DU report. Call me at Franklin Loan Center if you need more information.

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