SimpleMortgageCalc

Pre-Approval Phase

Before you start house hunting, getting pre-approved for a mortgage is an essential first step. Pre-approval gives you a clear idea of how much you can borrow and shows sellers you're a serious buyer.

Required Documents for Pre-Approval:

What Happens During Pre-Approval:

1. The lender will run a credit check (this will appear as a hard inquiry on your credit report)
2. They'll verify your income, employment, and financial situation
3. If approved, you'll receive a pre-approval letter stating how much you qualify to borrow
4. Pre-approval letters are typically valid for 60-90 days

Home Search & Purchase Agreement

With pre-approval in hand, you can now shop for homes within your budget. Once you find the right property and your offer is accepted, you'll sign a purchase agreement.

Key Elements of This Phase:

• Finding a home that meets your needs and budget
• Making an offer and negotiating with the seller
• Signing a purchase agreement (with contingencies for financing, inspection, appraisal)
• Paying earnest money (typically 1-3% of the purchase price)

Once your offer is accepted, you'll need to notify your lender immediately to begin the formal mortgage application process.

Formal Loan Application

Now it's time to complete the official mortgage application with your chosen lender. This is typically done after you have a signed purchase agreement.

What to Expect:

• You'll complete the Uniform Residential Loan Application (Form 1003)
• You'll need to provide the property address and details from the purchase agreement
• You may need to update any financial documents if your pre-approval documentation is older than 30 days
• The lender will issue a Loan Estimate within three business days, detailing:
  • Interest rate and monthly payments
  • Estimated closing costs
  • Other fees and terms of the loan

Processing Phase

After submitting your application, the lender begins processing your loan. This involves verifying all the information you've provided and ordering various reports.

What Happens During Processing:

• Appraisal: The lender orders an appraisal to verify the property's value
• Title search: A title company searches public records to ensure there are no liens or claims against the property
• Employment verification: The lender confirms employment details directly with your employer
• Tax transcript request: The lender may request your tax transcripts directly from the IRS to verify your income
• Bank statement verification: The lender may contact your bank to verify deposits and account balances

Your Responsibilities During This Phase:

• Respond promptly to any requests for additional documentation
• Avoid making major financial changes (changing jobs, taking on new debt, large bank deposits without documentation)
• Stay in communication with your loan officer

Underwriting Phase

Underwriting is the process where the lender evaluates the risk of lending to you and determines if you meet all their requirements for approval.

What Happens During Underwriting:

• An underwriter reviews your entire application package, including:
  • Credit history and scores
  • Income and employment history
  • Debt-to-income ratio
  • Assets and down payment funds
  • Property appraisal
  • Title search results
• The underwriter may request additional documentation or explanations for anything that raises questions
• They'll issue one of the following decisions:
  • Approved: Your loan is approved as requested
  • Approved with conditions: Your loan is approved, but you must satisfy certain conditions first
  • Suspended: The underwriter needs more information before making a decision
  • Denied: Your application does not meet the lender's requirements

Pre-Closing Phase

After underwriting approval, you're almost at the finish line. There are a few final steps before closing day.

Final Steps Before Closing:

• Clear all conditions: Provide any final documentation requested by the underwriter
• Secure homeowners insurance: Obtain a policy and provide proof to your lender
• Review Closing Disclosure: This document details your final loan terms and closing costs and must be provided at least three business days before closing
• Arrange for closing funds: Prepare a certified check or wire transfer for your closing costs and down payment
• Final walk-through: Inspect the property one last time to ensure its condition hasn't changed

Closing Day

Closing day is when you'll sign all the final paperwork, pay closing costs, and receive the keys to your new home.

What to Expect at Closing:

• The closing typically takes place at a title company, attorney's office, or escrow office
• You'll need to bring:
  • Government-issued photo ID
  • Cashier's check or wire transfer confirmation for closing costs
  • Proof of homeowners insurance
  • Any other documents requested by your lender or closing agent
• You'll sign numerous documents, including:
  • Promissory note
  • Mortgage or deed of trust
  • Closing Disclosure
  • Various affidavits and declarations
• The closing agent will explain each document before you sign
• Once all documents are signed and funds are transferred, you'll receive the keys to your new home