What factors are typically considered during underwriting?

During underwriting, the primary focus is on assessing the borrower's creditworthiness and the property value. Understanding the financial condition of the borrower ensures that they have the ability to repay the loan, which is evaluated through their credit history, income, debt obligations, and overall financial stability. On the other hand, determining the property's value is crucial because it impacts the lender's risk: a property that is valued higher may provide a greater cushion for the lender in case of default.

Both the creditworthiness of the borrower and the value of the property are key elements that guide lenders in making informed decisions about loan approval and the terms of the loan. Ensuring these factors align with the risk tolerance of the lending institution protects both the lender and the borrower in the financial transaction.