What is indicated by a lender's funding ratio?

The funding ratio provides insight into the effectiveness and efficiency of a lender's operations, specifically regarding the percentage of mortgage applications that successfully close compared to the applications they have processed. This ratio is critical for understanding how well a lender converts approved loans into funded mortgages. A high funding ratio suggests that a significant portion of applications leads to actual mortgage closings, indicating strong underwriting practices, competitive pricing, and overall customer satisfaction. This metric is essential for assessing a lender's performance in the mortgage market, as it highlights their ability to turn approved applications into completed transactions.