Steps For Obtaining A Mortgage When Buying A Home

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Before you started your home search you should have already gotten a pre-approval from a mortgage company.  Somewhere in between getting your offer accepted and your home inspection you should contact your mortgage lender.  They’ll get the official loan application started.  The pre-approval is simply that.  It isn’t a formal application.  Once you’ve notified your lender that you’ve found a house they’ll make it all official. 

During the pre-approval process you gave your loan originator certain pieces of documentation.  Depending on how long ago that was, you will need to provide the most recent versions of those pieces.  The most common items that need to be updated are pay stubs and bank statements. 

After documentation has been received, your mortgage lender is ready to issue a formal package for your signatures.  This is done electronically and all documents will be acknowledged electronically as well.  There are many compliance guidelines that lenders need to follow regarding disclosures and when they’re sent. 

Once these steps have been completed than the loan will be sent to underwriting.  There will usually be a short waiting period (typically 2-4 days depending on your lender) before the loan will be reviewed & approved.  This step and the appraisal step will usually overlap. 

At this point, you’re satisfied with your inspection results.  The lender has submitted the loan package and they’re ready to order the appraisal.  This report is to verify that the purchase price of the house is supported by other sales in the area.  

The lender will receive what’s known as a Conditional Approval.  That means that they’ve approved the mortgage application but that additional items are required.  These items can vary based on your circumstances.  Generally they’ll include title work, homeowner’s insurance, appraisal in addition to any personal requests from you. 

Once the additional documentation has been provided to your mortgage lender they will submit those documents back to the underwriter.  There will be another wait (typically 2-4 days depending on your lender).   

The magic words that make everyone happy.  This means that the lender has signed off on any additional documents that they needed and that your real estate agent can schedule a closing with all parties. 

A key component of the compliance process is received and acknowledging a copy of the Closing Disclosure.  All lenders will vary as to when they send this document out.  It will usually come toward the end of the process.  Some lenders will send it prior to issuing a Clear To Close.  Some will wait until the loan is Clear To Close.  This document is important because there is a mandatory requirement for a 3 day waiting period for closing on your mortgage after it is signed.  This count includes Saturdays but excludes Sundays and Federal Holidays. 

Once your closing is scheduled, the title company and the lender will collaborate on the final loan documents.  You will receive a copy of the final Closing Disclosure.  It will outline all of your closing costs, down payment, escrow set up and tax prorations.  The final number needed at closing will typically be wired to the title company or you will obtain a cashier’s check payable to the title company.  This will vary based on the specific title company that is handling the closing. 

Timing is a very important part of the loan process.  Some lenders (especially large institutional lenders) may take a very long time to get to closing.  That doesn’t mean their services aren’t good to use.  However, it’s important to get an expectation from them.  

Communication is key.  If a lender doesn’t communicate well with you then you may be better served by another organization.