Buying a home starts before you find the house. Getting pre-approved is an important step, but being truly prepared means understanding your financing, your estimated monthly payment, and how much money you may need before you start making offers.
We’ll look at your income, credit, monthly debts, available funds, and overall financial picture to help determine which mortgage options may fit. Just as importantly, we’ll talk about what those options mean for your budget—not simply the maximum amount you may be able to borrow.
Being prepared also means identifying potential issues early. A change in employment, a large deposit, new debt, or something on your credit report can affect your financing. Finding those things before you’re under contract gives us more time to address them.
Our goal is simple: when you find the right home, you should understand your financing, know what to expect, and feel ready to make an offer.
That’s the difference between being pre-approved and being prepared.
A mortgage pre-approval helps you understand what financing may be available before you start making offers on homes. We’ll review information about your income, assets, credit, and monthly debts to evaluate your financing options and determine an appropriate price range.
But a pre-approval is not the same as final loan approval. Your financing will still depend on factors such as the property you choose, the purchase agreement, appraisal when required, updated financial information, and final underwriting.
That’s why we believe a good pre-approval should be about more than producing a letter. You should also understand your estimated payment, anticipated cash needed to close, and which loan options may make sense for your situation.
When you’re prepared as well as pre-approved, you can shop for a home with a much clearer picture of your financing.
Once you’re prepared and pre-approved, it’s time to find the right home.
When you’re ready to make an offer, your real estate agent will help you structure the purchase agreement and negotiate with the seller. Your financing can be an important part of that offer, which is why we want your pre-approval work completed before you find the house you love.
Once your offer is accepted, send us the fully executed purchase agreement as soon as possible. Now we have an actual property, purchase price, and closing date to work with, and your mortgage moves into the next phase.
This is also when we’ll confirm your loan structure and discuss any important financing details related to the property or purchase agreement.
The Loan Estimate is a standardized disclosure that provides important information about the mortgage you are considering, including the loan terms, estimated payment, closing costs, and other features of the loan.
For most mortgages, once you submit the information that constitutes an application, the lender generally must provide a Loan Estimate within three business days.
Your Loan Estimate gives you an opportunity to review the proposed financing and ask questions. It can also help you compare loan options and understand how the interest rate, loan program, mortgage insurance when applicable, and closing costs affect your overall financing.
Receiving a Loan Estimate does not mean your mortgage has received final approval. The loan will still go through processing and underwriting before it can be cleared for closing.
Once you decide to move forward with your mortgage, the loan enters processing. This is where much of the behind-the-scenes work begins.
Your loan team may verify income, employment, assets, credit, insurance, property information, and other details needed for your particular loan. Depending on your situation and loan program, you may also be asked for updated documents or written explanations.
Why are you asking me for another document?
This is one of the most common questions during the mortgage process. Sometimes a document has become outdated, new information needs to be verified, or something in the file creates an additional documentation requirement.
It doesn’t necessarily mean something is wrong.
The best thing you can do is respond to document requests as quickly as possible. We’ll explain what we need and help you understand why it’s being requested whenever possible.
For many mortgage transactions, an appraisal is used to provide an independent opinion of the property’s value and to evaluate certain characteristics of the home. The appraisal is performed by a licensed or certified appraiser who is independent of the loan officer and real estate agents involved in the transaction.
The appraiser analyzes the property and relevant market data, which may include recent sales of comparable homes, location, size, condition, quality, features, and other factors.
What happens if the appraisal comes in lower than the purchase price?
A low appraisal does not automatically mean the purchase is over, but it can affect the financing. Depending on the situation, possible options may include reviewing the appraisal for errors or unsupported information, renegotiating with the seller, changing the transaction structure, bringing additional funds to closing, or exercising rights available under the purchase agreement.
If an appraisal issue comes up, we’ll help you understand how it affects your financing and work with you and your real estate agent on the available options.
Underwriting is the stage where your mortgage file is reviewed to determine whether the borrower, property, and loan meet the requirements of the mortgage program.
The underwriter reviews the documentation in your file, which may include your income, employment, assets, credit, monthly obligations, source of funds, appraisal, and other information related to the transaction.
It is very common for an underwriter to approve a loan subject to additional conditions. That does not necessarily mean there is a problem. It simply means certain items need to be documented, clarified, or completed before the loan can receive final approval.
This is another reason being prepared early matters. The more we understand about your financial situation before you are under contract, the better positioned we are to anticipate documentation that may be needed later.
A conditional approval means the underwriter has reviewed your mortgage file but still needs certain items completed or verified before final approval.
Conditions vary from loan to loan. You might be asked for an updated bank statement, pay stub, explanation of a deposit, documentation related to the property, proof of insurance, or another item needed to complete the file.
Getting conditions after underwriting is a normal part of many mortgage transactions.
When we receive the conditions, we’ll work with you to gather what is needed and submit the information for review. Responding promptly and providing complete documentation can help keep the loan moving toward final approval.
“Clear to close” is the phrase every homebuyer wants to hear. It generally means the major underwriting requirements have been satisfied and the loan can move toward closing.
There are still final steps to complete, including preparation of closing documents and confirming the final amount needed for closing.
You’re almost there—but this is not the time to change your financial picture.
Until your mortgage has closed, avoid making significant financial changes without talking with us first. That includes opening new credit, financing furniture or a vehicle, making unexplained large transfers or deposits, or changing employment.
Even late in the process, changes to your credit, employment, assets, debts, or other qualifying information can affect the loan.
When in doubt, call us before making the change.
The Closing Disclosure provides the final details of your mortgage, including your loan terms, projected monthly payments, closing costs, and the amount you are expected to bring to closing.
For most mortgages covered by the federal disclosure rules, you must receive the initial Closing Disclosure at least three business days before closing. This gives you time to review the final terms and ask questions before signing your loan documents.
Compare the Closing Disclosure with your Loan Estimate and review anything you don’t understand.
We’ll also confirm the amount and acceptable method for bringing funds to closing. Because wire fraud is a serious risk in real estate transactions, never rely on unexpected wiring instructions sent by email without independently verifying them with the appropriate trusted party.
Closing day is when you’ll review and sign the final documents needed to complete your mortgage and home purchase.
Before closing, you’ll know the amount you need to bring and how those funds should be delivered. You’ll also need acceptable identification and any other items specifically requested for your closing.
Take your time reviewing the documents and ask questions if something doesn’t look right or you don’t understand what you’re signing.
Once the required documents have been signed and the transaction has completed the necessary funding and recording steps, the purchase can be finalized.
And then comes the part you’ve been working toward: getting the keys to your new home.
