When is underwriting performed in the loan process?

Underwriting is a critical part of the loan process that occurs before loan approval, and its main purpose is to assess the risk associated with lending to a particular borrower. During underwriting, the lender evaluates the borrower's creditworthiness, financial history, employment stability, and overall ability to repay the loan. This rigorous assessment helps ensure that the lender makes informed decisions about whether to approve the loan based on the likelihood of repayment and the property's value.

The timing of underwriting is crucial because it directly influences the subsequent steps in the loan process. Once underwriting is completed and the risk is assessed, the lender can either approve or deny the loan application. This ensures that only borrowers who meet certain criteria are offered loans, thereby reducing the lender's financial risk.

The other options focus on stages that occur either after the loan is approved or relate to other processes distinct from underwriting, which solidifies why the assessment of risk before approval is the correct context for when underwriting is performed.