Buying a home is easier when you know what to expect. Here is the process in order, with what each step requires from you.
Step 1: Get prequalified
Prequalification estimates what you can afford based on the income, assets, and debts you tell your lender about. It takes a few minutes and gives you a price range to start with.
Step 2: Get pre-approved
Preapproval goes further. Your lender checks your credit and reviews your documents, so the number is based on verified information. Sellers take a preapproval more seriously than a prequalification. Here’s what makes a preapproval reliable.
Have these ready:
- Pay stubs covering the last 30 days
- W-2s for the last two years, plus tax returns if you are self-employed
- Bank statements for the last two months
- A government-issued photo ID
Step 3: Find a home
With a pre-approval, you and your real estate agent can focus on homes in your price range. Decide on location and must-have features before you start touring.
Step 4: Make an offer
Your agent helps you write an offer based on the market and your budget. When the seller accepts, you sign a purchase agreement that sets the price, the closing date, and the terms.
Step 5: Apply and get your Loan Estimate
Once your offer is accepted, you complete your loan application for that property. Within three business days, your lender sends a Loan Estimate showing your rate, monthly payment, and estimated closing costs.
Step 6: Home inspection
A home inspector reviews the property’s condition in detail. If the inspection finds problems, you can ask for repairs or a credit, or walk away if your contract allows. Read why an inspection is not the same as an appraisal.
Step 7: Lock your rate and submit documents
You can lock your interest rate once you have an accepted offer, which protects you if rates rise before closing. Your lender will also ask for updated documents. Send them quickly, because this is where most delays start.
Step 8: Appraisal
An appraiser gives the lender an opinion of the home’s value. If the value comes in below the price, you and the seller can renegotiate, or you can make up the difference.
Step 9: Underwriting and clear to close
The underwriter reviews your documents, credit, and the appraisal against the loan’s guidelines. You may be asked for a few more items. When every condition is met, the lender issues a clear to close.
You will receive a Closing Disclosure with your final numbers at least three business days before closing. Compare it with your Loan Estimate and ask about any changes.
Until you close, avoid new debt, job changes, and large undocumented deposits. See what to avoid after applying for a home loan.
Step 10: Closing day
You sign your final documents, pay your closing costs and any down payment, and receive your keys.
Frequently asked questions
How long does the home loan process take?
Most purchases take 30 to 45 days from an accepted offer to closing. Timing depends on how quickly you provide documents, when the appraisal is completed, and the closing date in your contract.
What is the difference between prequalification and pre-approval?
A prequalification is an estimate based on the information you provide. A pre-approval means the lender has checked your credit and reviewed your documents, so it carries more weight with sellers.
What documents do I need to apply for a home loan?
Most borrowers need pay stubs from the last 30 days, W-2s from the last two years, bank statements from the last two months, and a photo ID. Self-employed borrowers also need tax returns.
When can I lock my interest rate?
You can usually lock your rate once you have an accepted offer on a specific property. A rate lock protects you if rates rise before closing and lasts for a set number of days.
Next step
If you’re getting ready to buy, start with a prequalification, and I’ll tell you where you stand. Call 219-695-0369 or text me at 219-758-8072.
Get prequalified here or send me a message.
Using a VA loan? See how the VA loan process differs.
