Underwriters are those professionals who determine the financial status and income sources of potential clients to ensure that the loans taken by them are returned as per the firm's rules and policies. They are also needed to analyze whether the clients can pay back the credit in the stipulated time period.
Employed in a variety of setups, an underwriter's job description mainly depends on the field of work he or she is employed in. In fact, there are various types of underwriters, and their responsibilities differ accordingly. Let's have a look at the types, along with their roles, required education, and prospective remuneration.
Types of Underwriters
The job of a mortgage underwriter includes activities that are related to acceptance or rejection of mortgage applications. These professionals evaluate and verify applications related to mortgages. They ensure that the client seeking a loan has the financial abilities to repay it.
Banks are financial institutions that are a hub for many activities. Banks offer different types of loans to its customers, and it is the job of a bank underwriter to determine whether or not to grant a loan to a customer.
They analyze reports and documents of the customers through computerized systems, to determine their creditworthiness. The duties of a bank underwriter includes using various methods to check the creditworthiness of a customer, like determining annual income, credit score, and history and employment record.
One of the main responsibilities of these professionals is that they help in the formulation of policies and plans. They specialize in fields like property and casualty underwriting, commercial underwriting, and life insurance underwriting.
Generally, a bachelor's degree in finance, business, or an associate degree in a related field is important for getting specific types of job in every profile. For example, a mortgage underwriter can have an associate's degree in mortgage of financial services.
Some premier institutions like Federal Housing Administration (FHA) or Veteran's Administration (VA) and The Mortgage Banking Association (MBA) provide certification programs in subjects related to mortgage payment.
Similarly, for banking underwriters, a bachelor's degree in banking, finance, or business would be relevant. Employers prefer candidates with related work experience. For insurance underwriters, a bachelor's degree in business, insurance, or economic-related subjects, with good skills in maths and statistics would be is essential.
Job security is dependent on the health of the economy. For example, a mortgage underwriter's employment depends on the strength of the banking systems and the real estate market.
According to the Bureau of Labor Statistics, the overall job growth of mortgage and bank underwriters by the year 2026 is estimated to be 11%. However, salary ranges have oscillated between US $43,000 to US $89,000 annually, and very successful underwriters can earn near about US $135,000.
At the same time, the employment of insurance underwriters is expected to decline by 5% from 2016 to 2026. The salary range varies between $67,000 to $75,000 per annum and the highest paid insurance underwiters earn around $123,000.
The career development path for an underwriter is totally dependent on the market and economy. In times when the economy isn't doing too well, when the market is low, and real estate businesses go through rough patches, underwriters, especially those in the mortgage field, face strict salary negotiation situations.