Underwriting

Underwriting is the lender's process for deciding whether to fund a mortgage. The underwriter (a person, sometimes assisted by automated systems) reviews the borrower's documentation, the property's appraisal, and the title search, and either issues a clear-to-close approval, lists conditions that need to be met, or denies the loan.

How it works: underwriting examines the same four buckets that informed preapproval, but with documentation depth that wasn't required earlier. Credit: a fresh credit pull and review of payment history. Capacity: verified income relative to debts (W-2s, pay stubs, tax returns, employment verification). Collateral: the property itself, verified by appraisal and title search. Cash: down payment plus reserves, sourced through bank statements with attention to large deposits.

Why it matters: most deals close on schedule. The ones that don't usually trace back to something underwriting surfaced, a discrepancy in income documentation, a low appraisal, an unsourced large deposit, an unexpected debt that pushed the back-end DTI too high. The under-contract period is when these issues come up, and resolving them quickly determines whether closing happens on the original timeline.

Common gotcha: borrower behavior during underwriting matters. New credit, job changes, large unsourced deposits, or late payments during the under-contract period can derail a loan that was on track at preapproval. The conventional posture during this stretch is to treat the financial picture as frozen: no new credit, no major job moves, no large deposits without documentation. The article at /learn/what-loan-underwriting-actually-checks goes deeper.