Underwriting
The lender's formal review of a loan application to confirm it meets program guidelines and is acceptable to fund.
Underwriting is where the actual loan decision happens. An underwriter, a trained professional applying program guidelines, reviews the borrower's income, credit, assets, and the property file to determine whether the loan can move forward, with what conditions, and at what risk profile.
Most modern underwriting starts with an automated decision through Fannie Mae's Desktop Underwriter or Freddie Mac's Loan Product Advisor. The automated finding sets the baseline, and a human underwriter then verifies that the supporting documentation matches what the system saw.
Underwriting outcomes are typically one of three: approved (often with conditions), suspended (needs more information), or denied. Most denials at the underwriting stage are because something didn't match expectations, and most can be resolved by addressing the specific concern.
Related terms
Other terms you'll see alongside Underwriting
A formal written agreement from the lender promising to fund a loan, subject to specific conditions.
A lender's review of your credit report and score to assess your willingness and ability to repay debt.
The percentage of your gross monthly income that goes toward debt payments, including the proposed new mortgage.
The four pillars of mortgage underwriting, every loan approval comes down to verifying these four categories.
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