What does an underwriter do?

There are four common types of underwriters who perform slightly different roles depending on their industry. These four types are insurance underwriters, mortgage underwriters, security underwriters, and loan underwriters.

Insurance underwriters assess and analyze the risks involved in getting approval for an insurance policy. They evaluate a company's risk in insuring a home, car or driver, or health and life insurance policies for individuals.

After determining the risks involved, the underwriter sets a price charged in the form of an insurance premium in exchange for the risk taken.

Mortgage loan underwriters are the most common type of underwriters. A mortgage underwriter will perform a thorough evaluation to determine if the risk is manageable. The underwriter uses their risk assessment to weigh various factors of your mortgage loan application to determine the acceptable level of risk.

Securities underwriters regulate the issuance and distribution of securities. They often work with initial public offerings to evaluate the risk and determine a fair price for specific securities. The underwriting process is often performed on behalf of a potential investor, usually an investment bank.

Loan underwriters handle all kinds of loans that a person might take out. While mortgage underwriting is the most common type of loan underwriting, there are also underwriters who assess eligibility for car loans, personal loans, and even academic loans.

In all instances, an underwriter assesses financial status to determine whether you qualify for loan approval.