Monday, December 8, 2008

What Does Underwriting Mean?

Q: What does underwriting mean?

A: Underwriting is the process used to determine whether a borrower falls within the risk guidelines for a particular loan product. On it's simplest level, underwriting is a "check off the boxes" process. Do the borrowers have high enough credit scores? Do they have enough money for a down payment and closing costs? Do they make enough money to be able to pay the loan back? The underwriting guidelines are different for every type of loan. When a mortgage broker "qualifies" a borrower, he makes sure the borrower fits within the underwriting guidelines for the loan they are applying for.

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