What Does it Mean When a Loan Goes to Underwriting?

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The process of getting a loan involves several steps before you can be approved. One of the most important parts of the lending process is underwriting. It is during this stage when the lender evaluates your situation and determines if you are a good candidate to receive a loan.

What is Underwriting?

Loan application
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When a loan goes into underwriting, it means that an individual is evaluating your personal financial information to determine if you are eligible to receive a loan. In some cases, a team of people in an underwriting department will work together to determine your eligibility. A large part of underwriting involves determining the risk level involved when extending a loan to a borrower. It is the underwriter's job to estimate how likely you are to default on your mortgage. The underwriter will look at many factors, such as your credit score and your income, when evaluating your application. The ultimate goal of the underwriter is to make sure you meet the loan guidelines set forth by the lending institution. Each lender has its own individual lending standards, and it is the underwriter's job to ensure that these guidelines are adhered to.


Underwriting process
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The underwriting process is generally one of the final parts of the mortgage lending process. The underwriter will get all your financial documents and review them before making a decision on your application. This process could take a few days or a few weeks to complete. The length of time will depend on the standards of the lender and the size of the loan you are requesting.

Credit History

Credit history
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One of the most important factors evaluated during the underwriting process is your credit history. Your credit history tells the underwriter many things about your past that could be helpful when making a decision. The underwriter can tell how much debt you have and how long your credit history is. The underwriter will also take a look at your credit score. Your credit score is a numerical representation of your credit history and is a key indicator of your ability to pay back the loan.


Home loan
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During the underwriting process, the underwriter will generally use financial ratios to help make the lending decision. The underwriter will look at your income in relation to the amount of debt you have. This is known as the debt-to-income ratio, and it cannot be above a certain amount if you want to qualify for a mortgage. The underwriter will also look at the loan-to-value ratio. This is a ratio that looks at the value of a house to the total amount that is being lent.