Financing Underwriting Defined

When an individual seeks funding for a real estate purchase, the loan application is scrutinized by an underwriter to determine how much risk the lender is willing to accept. Real estate underwriters take into consideration the value of the property through an appraisal of the property usually ordered after a transaction is approved by Buyers and Sellers and the property is in escrow.
The United States Department of Housing and Urban Development defines underwriting as "the process of analyzing a loan application to determine the amount of risk involved in making the loan; it includes a review of the potential borrower's credit history and a judgment of the property value."