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News & Tips

Home Loan Process: Pre-Approval to Closing

junio 1, 2017 by Space Coast Credit Union

If you’re new to home buying, or if it’s been awhile since your last home purchase, it’s natural to wonder how the mortgage loan process works. The following is a brief overview of each step that goes into purchasing a home, from beginning to end.

The Pre-Approval

The very first step in the home loan process is getting pre-approved for a home loan. Not only will this provide you with documentation showing sellers and real estate agents that you are serious about buying, it will also help you get a better idea of the price range you can afford.

In the pre-approval stage, your credit history, general financial situation and the like is checked and the lender determines your general ability to take on a mortgage of a certain dollar amount. The amount of money that you can provide as a down payment is a key factor; the more money you can put down, the more house you can buy.

Looking at Houses

For many people, this part is the most fun, as you attend open houses, check multiple listing services and work with a real estate agent to find the house of your dreams. Don’t be afraid to start out with a large list of potential homes – you can also narrow it down as you look at each one in more detail.

Choosing the One: Making an Offer

In this stage, you will offer the seller a certain dollar amount for the house. Be careful to include relevant contingencies in your purchase agreement, such as the need for the house to appraise for a certain amount, for the home inspection to go well and for your loan to be officially approved for the particular property. In this stage you’ll also need to provide earnest money (often one percent of the purchase price) to show you are committed to the process. Once your loan is approved, the earnest money you paid becomes part of the down payment.

The Mortgage Loan Application

This is a more detailed version of the pre-approval stage, where your employment and income information is collected, along with information about your assets, debts, and details about the home you are purchasing. This is when you will need to commit to mortgage loan details, such as the number of years on the loan, whether you want a fixed rate or an adjustable rate, or whether the property qualifies for a jumbo loan. You will now receive documentation that lists your estimated closing costs, as well as your mortgage payment (principal, interest, property taxes, and insurances) and the ultimate payback amount (loan amount plus interest paid over the life of the loan).

Loan Processing and Underwriting

This is when the lending institution reviews all of the documentation that you provided, verifies the information, orders an appraisal of the property, and has the title search conducted. After all this, the lender will decide if you qualify for the loan.

Signing Mortgage Papers

When the processing and underwriting is successfully completed, expect to sign a lot of papers, including the closing disclosure that lists your actual closing costs (estimated earlier in the process). When the loan closes, then the title of the home will officially be in your name and the property will be yours!

Want to learn more about the home loan process? Learn more by contacting the Member Service Center to speak with our mortgage experts about any questions you may have!
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