The Mortgage Approval Process in Plain English
There are many requirements and steps to obtain a mortgage, and the process can feel intimidating whether you’re a first-time homebuyer or seasoned veteran.
To make the mortgage approval process easier to understand (and to help you prepare), here is a guideline of the steps. The guideline is meant to be taken as a general overview, and your loan officer will work with you to explain the process in greater detail.
Pre-qualification helps you determine the type and size of loan ideal for your situation. During this stage, you’re encouraged to “shop around” and speak to different lenders.
The lenders will request information about your employment history, income, and assets. Most lenders will also obtain a copy of your credit report to help them determine your creditworthiness and suggest potential loan programs.
You can begin pre-qualification when you think about buying a home, and there are no strings attached in committing to any lender.
If the lender determines that you are pre-qualified, your loan officer will help you select the mortgage program best for you and explain the next steps. Your loan officer can also provide you with a pre-qualification verification letter that can help your home buying process.
If you aren’t pre-qualified, your lender can provide some guidance and suggest resources to help you move in the right direction.
Search for homes and make an offer
Now is the exciting part! Once you’re pre-qualified, you can search for a house you want and make an offer. A real estate agent can work closely with you and your loan officer to streamline this process.
After you find a house and agree to terms with the seller, you’ll sign a purchase agreement which binds the offer and lets you move forward with obtaining your loan.
Mortgage application and loan processing
During this stage, you’ll provide your lender with your home purchase agreement, finalize your mortgage application, and provide any additional documentation needed to begin the loan processing.
Your loan officer will work closely with you to explain the required steps and request any additional information needed.
The underwriter is the ultimate decision-maker. They evaluate your application and supporting documentation against lending guidelines, and evaluate your ability to repay the loan.
Sometimes the underwriter will issue a “conditional approval” and request additional information needed to satisfy those conditions. Your loan officer will help explain the conditions to you and work with you to obtain required documentation.
Once the underwriter ”clears” your loan to close, you’ll review and sign a package of documents that seal the deal between you, the lender, and the seller.
These documents are reviewed with you by a closing agent or attorney who makes preparations for the funding of the loan. Congratulations on becoming a homeowner!
We hope this post helps simplify some of the steps in the mortgage process. If you’re ready to begin the empowering step into homeownership, please contact me today!