Buying a home is an exciting experience, but it can be overwhelming, especially if you’re a first-time homebuyer. If this is your first time purchasing a home, you may have questions about the loan process. Below, we’ve outlined the home finance process from start to finish so you know what to expect.
9 Steps of the Home Loan Process
We’ve broken down the home finance process into nine different steps to make it easy to understand. Here’s what to expect for each phase of the process.
1. Shop Around & Compare Lenders
One of the most common mistakes that first-time buyers make when it comes to taking out a mortgage is not shopping around. You should get quotes from a few lenders so you can compare closing costs and rates.
2. Apply for Pre-Approval
Once you’ve found a lender you think you want to work with, it’s time to apply for pre-approval. Most real estate agents will want to see your pre-approval letter before they agree to work with you. So it’s important to complete this step before you begin shopping for a home.
3. Make an Offer
Here comes the fun part! It’s time to start shopping for a home. Once you’ve found the perfect one, you can go ahead and make an offer. Your offer may include contingencies like a satisfactory home inspection. If your offer is accepted, you’ll be required to make a deposit. This is called earnest money.
4. Start the Approval Process
Next, your loan will enter the processing stage. You’ll be required to submit the rest of the items for your mortgage application. Your lender will verify your employment, income, and credit and perform a title search.
5. Get an Appraisal
During the processing phase, your lender will order a home appraisal. You may be required to pay for your appraisal upfront before closing. Once the inspection is complete, it is sent to your lender for review. Then, your file goes to underwriting for review.
6. Choose Home Insurance
Before closing, you’ll be required to find and purchase home insurance. Your insurance company will put together a binder which will be sent to your lender.
7. Closing Disclosure
Once your loan is approved, your lender will prepare the final documents. Then, they’ll schedule the closing. Before closing, you’ll do your final walk through of the home. You’ll also receive your Closing Disclosure which confirms your loan costs.
8. Make Arrangements for Your Payments
Next, you’ll want to make arrangements for paying your closing costs and down payment. Depending on the circumstances, you’ll need to either order a wire transfer or obtain a cashier’s check.
9. Closing Day
On closing day, you’ll sign all of your loan documents. If you obtained a cashier’s check, you’ll hand it over during this time. This is the final step of the home finance process.
Apply for Pre-Approval
Ready to begin the home finance process and make your dream a reality? Apply for pre-approval today to get started!