In mortgage lending, what does the process of "underwriting" evaluate?

In mortgage lending, underwriting is a crucial process that evaluates the risk associated with lending money to a borrower. This involves a thorough assessment of the borrower’s financial status, including their credit history, income, assets, employment stability, and overall debt-to-income ratio. Underwriters use this information to determine whether the borrower is likely to repay the loan and to what extent the lender is exposed to potential default risk.

While the property's market value, the borrower’s payment history, and the terms of loan repayment are all important factors in the mortgage lending process, they are not the primary focus of underwriting. The main objective is to assess and quantify the risk involved in granting the loan to the particular borrower, ensuring that the lender makes an informed decision based on the borrower's ability to meet their repayment obligations.