What To Expect During The Mortgage Process

Certified Mortgage Advisor
NMLS 1701021
Published 
November 9, 2018

What to expect when buying a home

Buying a home can be one of the most overwhelming things to do. And really there's a lot of confusion. I think people in this industry have made it not very clear and understandable to be able to go through the mortgage process.

So I want to walk you through step-by-step what happens when you're searching for a home all the way to getting the keys to your house. So here's a little graphic for you and it's going to walk through each step. So let's run through each of these steps that we can feel more comfortable and confident when you end up going through the mortgage process in the future.

Complete application

So this can happen at a couple of different points during the loan process. Most often, this is how it goes. Is it going to talk with the lender and you're going to get pre-approved.

Answer a questionnaire

So pre-approval is basically where you'll just go through a client questionnaire. It's going to ask you some questions to get a financial snapshot of where you are at.

Submit your documents

After that, you'll submit some documents to verify the information on the application. So things like W2's, pay stubs, bank statements, and different things like that.

Credit check

So in the complete application, there'll be a credit check. And what your lender is going to be doing is assembling a picture to make sure that you're able to qualify for a house that you want.

Pre-approval and partner with a realtor

So after they issue you a pre-approval, what you'll be able to do is a partner with a realtor to be able to go out and look for some homes that you'd like. So after you're looking at some houses, you find one that you enjoy.

Write a contract

What you'll do is you'll write a contract for that property. So once you read the contracts your lender is going to get a copy of that contract as well. And so that is when we start the loan process.

Starting the loan process

The loan process is when we're taking your application and the documents that you submitted. And we're basically putting together one nice, neat file to be able to submit to an underwriter. So in this process, we might request things like an updated pay-stub, or maybe some additional documents to make sure that we have the loan wrapped up and ready for. So once we get that stage done, we'll move on to the appraisal.

Appraisal

So we're going to go ahead and order the appraisal early because it can take a week or two for an appraiser to go out, view the property and give us a report back. So the appraisal's paid for upfront, and that's where we're having an appraiser scheduled time to go view the property. And to give us a valuation of the property.

We got the application. You wrote a contract. We process the loan here on the back end. So we're packaging it together. We ordered the appraisal. The next step then is to submit the loan to underwriting.

Now, before underwriting happens, you'll get a set of disclosures somewhere about here in the process. and so in those disclosures, the main one that you'll be looking at is what's called the loan estimate.

Loan estimate

The loan estimate is going to detail every single feature of your loan. I'll give you a little peek behind the curtain that most people don't know that there are hundreds of different types of loan products, and if you choose the wrong one, A lot of money over the life of the loan.

Details of loan estimate

So in the loan estimate, it's going to detail everything that might be different about your loan. For example, what's the down payment gonna look like? What is mortgage insurance looking like for you? And it's going to detail everything, including mortgage insurance, homeowners, insurance taxes, principal, and interest, along with all of the other loan costs, things like taxes and homeowners insurance title, recording fees, and everything else that goes along in there. So you'll have a very clear idea of what your loan is going to look like in the future before it gets sent to underwriting.

Underwriting

So once everything is signed off, we have the application, we've processed it, or did the appraisal we'll submit your loan into. So underwriting is where we have a person at the lender and what they will do is they're going to check the file to make sure that everything meets the standards of the federal guidelines. So they're basically looking at all the information that we submitted, all the documentation that we provided to verify that information.

And they're making sure that your loan and your circumstance fit well with the federal guidelines for different types of mortgages. So after it goes through underwriting, what we're expecting to hear is a conditional approval.

Conditional approval

So as this stage right here, and a conditional approval basically just says, Hey, your loan is approved and ready to go. We just need a couple of things to clean up. So what might that look like? It might be that we're missing page four of the bank statement, or it might be that you need to go shop for homeowners insurance quotes, and we'll get that put into the file. So just a couple of little things to clean up. It's pretty normal to have a few conditions on top of a loan after it's out of underwriting.

Closing disclosure

So in this process, you'll be working with the lender and their team to make sure that you get all the conditions met. That way we can issue a closing disclosure. Now closing disclosure is, again that detail of all the loan terms. It's going to be very similar to your loan estimate.

Where it's still an estimated fee, but it's going to be a high estimate but more accurate to the actual loan when you get to the closing table. The way that regulations set up the whole mortgage process is we'll find that the loan estimate is a bit overstated. The closing disclosure is a bit less, and then the final closing disclosure that the title company works on is going to be less, and it's going to be the accurate fees that you'll pay.

Now it's time to relax

So after the closing disclosure is sent out we get a clear to close and a clear close is, you can take a breath. You can relax. The entire loan process is done. And over with all we're doing now is scheduling a time to close on that. And this is the point where you will be able to get the keys to your house.

The loan will be funded. Checks will be dispersed and you will be a homeowner. So hopefully this gives a little bit of clarity to the whole process of purchasing a house.

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