How is underwriting risk primarily assessed?

Underwriting risk is primarily assessed through the evaluation of the borrower's credit history and income. This assessment is crucial because it provides insights into the borrower's ability and willingness to repay the loan. A thorough review of credit history reveals the borrower's past borrowing behavior, including any defaults, late payments, or other financial concerns that may influence their creditworthiness. Additionally, evaluating the borrower's income helps underwriters determine whether the borrower has a steady and sufficient income to support mortgage payments, thus reducing the risk associated with lending.

While factors such as property equity, loan amount, and market trends can influence overall lending decisions, the primary focus during the underwriting process is on the borrower's financial profile. This comprehensive assessment helps lenders make informed decisions regarding the approval of loans and setting terms that are appropriate to mitigate risk.