Mortgage Loan Process: Steps to closing on a house?
Closing on a home is a big and exciting accomplishment, your home is probably where a lot of memories will happen and it’s a huge investment to embark on. The process of closing on a house can be outlined in a few steps:
- Purchase agreement acceptance
- Home inspection
- Loan origination
- Appraisal and credit underwriting
- Loan Approval
- Homeowner and title insurance
- Closing disclosures
Purchase agreement acceptance
A mortgage purchase agreement acceptance is when there is an agreement between the buyer and the seller of a home. Even with a pre-approval, you may need to submit updated information and your earnest money deposit. This deposit shows your mortgage lender that you are serious about purchasing a home. The earnest money deposit usually goes towards your closing costs or down payment.
The purchase agreement is ‘accepted’ once both you and the lender have signed all of the required documents. You are now essentially under contract for the purchase of your home, next is to close on the home.
When you’re in the process of securing a home you will need to complete a home inspection on the property. In some circumstances, the home inspection step can be waived.
A home inspection gives you important information about your future home that you may not be able to notice during a first walkthrough. An inspector will examine the of the home for any issues. They’ll look into the foundation, roof, structure, heating/cooling, and other important items.
Loan origination is essentially the start of the process with your lender. This process begins once you give documents to your mortgage lender. Your mortgage loan originator will collect and review your documents, verify the information, and clarify any questions. They will also provide you with an estimate of your mortgage loan amount with the interest rate.
Lender home appraisals & underwriting
Your home will need to be appraised by a licensed appraiser who will provide a value for your property. Keep in mind this is not the same as the sale price of the house. The appraiser will complete a report with the results of the appraisal. This report will be provided to you and the lender.
Mortgage processing starts once your application has been submitted. Your completed application is received by the loan processor who prepares it for the underwriting process. The underwriter will review your application in great detail.
You may be contacted to provide further information. Be prepared to provide additional information so this step doesn’t get delayed.
After the underwriting process is completed and everything checks out, your loan will be approved. However, your mortgage loan is not closed yet.
The lender may want to review your file once more to ensure that there haven’t been any recent changes. They may recheck your credit, debt-to-income ratio, employment, and other items before funding the loan. Be ready to provide any updates if required.
Homeowner & title insurance
Before closing on a home you will need to provide proof of homeowners and title insurance. The cost for both can be added into the closing costs.
Title insurance is a protection that covers both you and the mortgage lender from financial loss due to a faulty title. These policies cover items such as back taxes and liens on a property.
Homeowners insurance is usually included in your monthly mortgage payments. It provides coverage for repairing or rebuilding your home. Make sure to do research early to choose the right title and insurance company that works for you.
There are just a few things left to do in the housing buying process before you have the keys to your new home.
Your lender will provide your closing disclosure which shows the final details of your mortgage, including your closing cost and other fees. It is required by law that your lender provides disclosure before closing. This is a great time to complete a final review to make sure that the terms are what you have agreed to. You will be given a date, time, and location to meet to close on the home.
Prior to the closing day meeting you will be able to walk-through the property with your realtor. During this walk-through you want to make sure that any contingencies have been honored, previous owners belongings are moved out, appliances are checked, etc.
You’ve made it to closing day! Arrive to your closing meeting on time and schedule at least 2 hours of your day to complete all of the paperwork and get the keys to your new home.
How can I start the mortgage loan process?
If you are wanting to get started on the mortgage loan process then you have already done so by familiarizing yourself with the steps it takes to become a homeowner. It may seem like a lengthy process with a lot of steps but it does not have to be stressful, having a knowledgeable guide to help you through the process will make it go even more smoothly. We are here whenever you decide to make that first step in the mortgage loan process.
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply.
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