Loan underwriting is the process that lenders use to evaluate the risk of lending money to a borrower. During this process, underwriters review the borrower's financial information, such as their credit score, income, and debt-to-income ratio. This helps them determine whether the borrower is likely to repay the loan on time. Once the underwriter has assessed the borrower's information, they make a decision to approve or deny the loan application. If approved, the underwriter may also set specific terms, such as the interest rate and repayment period. This ensures that both the lender and borrower understand their responsibilities in the loan agreement.