Which process analyzes the investment merits of a mortgage loan?

Underwriting is the process that analyzes the investment merits of a mortgage loan. During underwriting, a thorough evaluation is conducted to assess the borrower's financial capacity, including their creditworthiness, income, employment stability, and overall ability to repay the loan. The underwriter examines the property's value through an appraisal and considers market conditions, which allows the lender to gauge the risk involved in granting the loan. By assessing both the borrower and the property, underwriting helps determine whether the investment in the mortgage loan is sound and aligns with the lender's risk tolerance and investment criteria.

The other options represent different aspects of mortgage processing. Documentation refers to the gathering and verification of the necessary paperwork to support a mortgage application. Refinancing involves replacing an existing loan with a new one, typically to secure better terms. Borrowing is simply the act of receiving funds from a lender, which does not involve the detailed analysis of investment merits seen in underwriting.