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Glossary term

Underwriting

Definition

Underwriting is how a lender reviews your application and finances to decide whether to approve your loan and on what terms.

Technical definition

Underwriting is the lender's assessment of a borrower's creditworthiness, repayment capacity, and collateral to determine loan approval, structure, and pricing.

Why it matters

Underwriting is where your financial records, cash flow, and collateral get scrutinized. Organized, accurate information helps this stage go smoothly.

Example

During underwriting, a lender might calculate your debt-service coverage ratio and review tax returns before issuing a decision.

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