Mortgage underwriting is the process that a lender uses to determine if the risk of offering a mortgage loan to a particular borrower is acceptable. It is a crucial part of the larger mortgage origination process. The underwriter is a financial expert who takes a look at your finances and assesses how much risk a lender will take on if they decide to give you a loan. The underwriting process directly evaluates your finances and past credit decisions. During the underwriting process, your underwriter looks at four areas that can give them a more complete picture of you: income, assets, debt, and property details. The underwriter helps the mortgage lender decide whether or not you’ll get approval on your loan and will work with you to make sure that you submit all your paperwork. Ultimately, the underwriter will ensure that you don’t close on a mortgage that you can’t afford.

To help the underwriter assess the quality of the loan, banks and lenders create guidelines and even computer models that analyze the various aspects of the mortgage and provide recommendations regarding the risks involved. However, it is always up to the underwriter to make the final decision on whether to approve or decline a loan. Most of the risks and terms that underwriters consider fall under the five C’s of underwriting: credit, capacity, cash flow, collateral, and character. The underwriter reviews your credit history as well as your credit score (FICO). When examining your credit history, the underwriter reviews that payments have been made on time and that there are no outstanding collections or judgments.

In summary, mortgage underwriting is the process of verifying information about your employment, income, assets, debts, and credit history to determine if you can afford to pay back the mortgage loan you are applying for. The underwriter is responsible for assessing the risk of offering a mortgage loan to a particular borrower and making the final decision on whether to approve or decline a loan. The underwriting process directly evaluates your finances and past credit decisions, and the underwriter looks at four areas that can give them a more complete picture of you: income, assets, debt, and property details.