Mortgage underwriting is the process a lender uses to determine whether or not you qualify for a mortgage. Underwriting is also the process by which a mortgage lender evaluates the risk of lending money to you. Before choosing whether to approve your mortgage application, the bank, credit union, or lender must determine if you are likely to be able to repay the house loan. This is done through underwriting. A loan officer or mortgage broker gathers the several documents required for your application prior to underwriting. After that, an underwriter validates your identification, investigates your credit history, and evaluates your financial condition, which includes your income, cash reserves, equity investment, financial assets, and other risk variables. To determine whether to accept you for a loan, a mortgage underwriter can personally review your loan application or run it via a software tool known as automated underwriting. Because a computer is doing the evaluating, automated underwriting is usually done faster than manual underwriting. However, because a machine is doing the assessing, it has some restrictions that may not be appropriate for borrowers with unique circumstances, such as fluctuating income. In some circumstances, manual underwriting may be more effective than an automated method in qualifying a borrower.

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