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

The primary function of loan underwriting in the loan process is to evaluate creditworthiness. This involves analyzing various factors that indicate the ability and reliability of a borrower to repay the loan. Underwriters typically review the borrower's credit history, income, debt obligations, and overall financial stability. By assessing these elements, underwriters determine whether the borrower meets the lending criteria, which is crucial in mitigating the lender's risk.

This process ensures that loans are granted to individuals or entities that are financially capable of meeting their repayment obligations. The evaluation of creditworthiness helps in making informed lending decisions, ultimately contributing to the financial health of the lending institution. This focus on creditworthiness underpins the risk assessment that is integral to the underwriting process.