What Is Underwriting?

The short definition

Underwriting is the process a lender uses to verify your income, assets, debt, credit, and the property itself before giving final approval on your mortgage. It happens after pre-approval, once you're under contract on a specific home.

What underwriters look at

• Verified income and employment
• Assets and down payment source
• Credit history and current debts
• The appraisal confirming the home's value

Why it matters

Underwriting is the step that turns a conditional pre-approval into an actual loan commitment. It's also why major financial changes — a new credit card, a new car loan — between pre-approval and closing can cause problems: underwriters re-verify your finances close to closing.

Related terms

Appraisal