Definition
The lender's or insurer's process of verifying risk before final approval: for a mortgage, that means documenting income, assets, debts, and credit, and appraising the property. Pre-approval is an estimate; underwriting is the exam.
Why it matters
Deals die in underwriting, not at pre-approval. Knowing what underwriters check, stable income, seasoned funds, steady debt levels, tells you exactly what not to change between application and closing.
Example
A buyer under contract sends the underwriter two years of tax returns, recent pay stubs, and a letter explaining a $3,000 deposit. A week before closing they finance furniture; the new account resets the debt math, and the closing is delayed while approval is re-run.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.