How the mortgage process works
With a little preparation, you can enjoy a streamlined home financing experience.
As with many things in life, being prepared can make all the difference. The same goes for mortgages. The more you understand about the home financing process, the easier and less stressful it will be.
In addition to reading up on mortgage terminology and trying your hand at calculating your monthly mortgage payment, familiarize yourself with the loan process below so you know what’s required and what you need to do to get from application to closing.
The 6-Step Loan Process
1. Get your documents
The following checklist will help you gather the documents you’ll need to apply for a home loan.
- Residential loan application, aka Form 1003, which includes a Fair Lending notice, loan info sheet, and credit authorization.
- Previous 2 years’ W-2s.
- Previous 2 years’ tax returns.
- Most recent rental agreement (if you own rental units).
- Last 3 bank statements.
- Most recent statements for mutual funds, IRA/401(k), or stock accounts.
- Settlement agreement and divorce decree (if applicable).
- For cash-out refinances, provide a letter explaining how you’d use loan proceeds.
- For non-U.S. citizens, your Green Card or H-1 or L-1 visa.
- Bankruptcy filed (if applicable): Schedule of creditors, discharge notice, and filing.
- For second mortgages, provide the first mortgage note.
2. Get pre-approved for a mortgage
You may come across terms like pre-qualification and pre-approval when researching mortgages. While they sound similar, they’re actually very different. And when it comes to buying a home quickly, one is far better than the other.
- Pre-qualification determines your ability to repay a loan based on asset and income information you provide. Pre-qualification often takes only minutes online or by phone. While it can give you an idea of what you may be able to borrow, it does not involve a detailed analysis of your credit and finances.
- A pre-approval is more rigorous process where your information is reviewed and verified by an underwriter. This involves an analysis of your financial status and credit history. With a pre-approval, you’ll be able to set your budget, negotiate confidently, and close faster.
3. Shop for mortgages and rates
Many types of loans are available with different requirements and benefits. Our experienced licensed loan officers can help you find a loan product that will best suit your needs based on your current financial situation and future goals.
For instance, if you plan on selling your home after only a few years, an adjustable rate mortgage (ARM) might be a viable option. If you plan on living in your home for a long time and you prefer fixed payments, you may want to consider a fixed rate mortgage.
4. Apply for a loan
You can start the process by:
5. Get approved for a loan
After applying for your mortgage, the loan review and approval process begins. Your credit, employment history, assets, property value and more will be verified. Use the guidelines below to ensure your loan moves through processing and underwriting smoothly.
- Complete your application thoroughly.
- Respond promptly to requests.
- Disclose all other loans and credit.
- Be accessible when scheduling a closing date.
- Don’t make any major purchases during this time.
- Don’t move money around in your accounts.
For more tips for a smooth home buying experience, check out our Home Buying Guide.
6. Close on your loan
Almost done! Once your loan has been approved, we’ll reach out to you to schedule a closing date. You’ll review final documents and make sure the rates and amounts are what you have agreed to. You’ll also pay closing costs and your down payment with a certified or cashier’s check (available through your bank). Bring your photo ID and Social Security card to this meeting. Once your loan has been funded, you’ll get your keys!
Let’s do this
Owning a home is an exciting and fulfilling experience that doesn’t have to be difficult. We want your home financing experience to be positive and memorable. So, take the next step. Contact one of our friendly and helpful licensed loan officers!
CrossCountry Mortgage, Inc. is an FHA Approved Lending Institution, and is not acting on behalf of or at the direction of HUD/FHA or the Federal government. All loans subject to underwriting approval. Certain restrictions apply. Certificate of Eligibility required for VA loans. CrossCountry Mortgage, Inc. is an FHA Approved Lending Institution, and is not acting on behalf of or at the direction of HUD/FHA or the Federal government. All loans subject to underwriting approval. Certain restrictions apply. Certificate of Eligibility required for VA loans. USDA Loans: Borrower income limited to 115% of median income for the area. Borrowers must have reasonable credit histories. 30-year loan term. Housing costs cannot exceed 29% of income; total debt payments cannot exceed 41% of income. Homes must meet state and HCFP building codes. Funding fee required. Available only in designated USDA rural areas.