What is the primary purpose of underwriting in the loan process?

The primary purpose of underwriting in the loan process is to determine the risk associated with a loan applicant. Underwriting involves the assessment of various factors including the applicant's credit history, income, debt-to-income ratio, and overall financial stability. This evaluation helps lenders decide whether to approve or deny a loan application, as it provides insight into how likely the applicant is to repay the loan.

While evaluating property value is part of the overall lending process, it is the analysis of the borrower’s financial health and risk profile that is fundamental to underwriting. Similarly, issuing a title policy and performing a title search are essential functions in the closing process but are not the primary focus of underwriting. These functions occur after the underwriting phase has confirmed that lending the money to the borrower is a sound decision.