Mortgage underwriting is the process by which lenders evaluate the risk of lending money to a borrower for the purpose of purchasing or refinancing a property. It is an important step in the mortgage process, as it helps lenders to determine whether a borrower is a good credit risk and whether they will be able to make the monthly mortgage payments.
During the underwriting process, a lender will typically review the borrower’s credit report, income, employment history, and other financial information. They may also require the borrower to provide additional documentation, such as proof of income or a letter of explanation for any negative items on their credit report.
It’s important for all lenders to understand your affordability and as well as looking at your income and expenses, they will be assessing your debt to income ratio and applying a mortgage stress test.
Based on this information, the lender will make a decision on whether to approve or deny the mortgage application. If the application is approved, the lender will also determine the terms of the mortgage, including the interest rate and the loan-to-value ratio.
Your application is assessed in all sorts of different ways, including credit checking, and people called underwriters will look at whether you meet the lender’s lending criteria. These tasks are carried out by a mortgage underwriter who will work for the lender.
