Once a homebuyer has a successful offer on a home, they will complete a mortgage application. In this example, we’ll say that the buyer has applied for a mortgage with a 25 year amortization period.
After reviewing the buyer’s credit score, income, and other debts, along with the given property, the underwriter comes to the conclusion that the buyer will not be able to comfortably afford the required monthly mortgage payments. Instead, the underwriter returns to the buyer and offers them a mortgage with a 30 year amortization period. The buyer accepts these terms and is approved for the mortgage.