What is a primary goal of the underwriting process?

The primary goal of the underwriting process is to determine whether to approve or deny the loan application. During underwriting, a thorough assessment of the borrower’s financial situation, which includes creditworthiness, income, debt-to-income ratio, and employment history, is conducted. Additionally, the underwriter reviews the property details and its value to ensure that it meets the lender's guidelines and risk criteria. This decision-making process is crucial because it helps mitigate the lender's risk by ensuring that loans are only extended to qualified borrowers. By determining approval or denial, underwriters play a key role in maintaining the health of the lending institution and the broader financial system.

In contrast, increasing closing costs does not align with the underwriting purpose, as the focus is on risk assessment rather than financial increment. Although expediting funding might be beneficial, it is not the primary goal; rather, ensuring a sound lending decision takes precedence. Evaluating the market value of the property is part of the underwriting process but is not the overarching goal in isolation; it serves the larger aim of ensuring that the loan can be safely approved.