9 STEPS TO MORTGAGE APPROVAL

9 Steps to Mortgage Approval

written by: Nathan Gillin

A good credit score (see Tips for Improving Your Credit Score!) is essential for mortgage approval, but what exactly does the process look like?

Step 1: Get Pre-Approved

Make sure that you can afford down payment for a potential home
- Financial readiness is key for mortgage approval
Pre-Qualification – Talk to a lender about previous homeownership as well as…
- Income
- Assets
- Debt
Pre-Approval – In-depth review of credit score and financial responsibility by a lender
- Lender will then tell you the loan amount in which you qualify for
- Among the documents you should bring to your Pre-Approval are as follows:
  - Driver’s License/ID
  - Tax Returns
  - Pay Stubs
  - Bank Statements
Getting this loan amount is extremely helpful for Step 2

Step 2: Shopping for Homes

Search for homes that are within your price range
- Consider your loan amount and your money for down payment
Check online portals such as Zillow
Look for homes for sale in the area from yard signs and local paper listings

Step 3: Make an Offer for Purchase

Pre-approval will give you leverage should you choose to negotiate the deal (which you should)
Satisfy contingencies, including the following:
- Appraisals (unbiased value of what the home is worth) must be close to loan amount (rather than lower)
- Home inspection reveals no major issues
- Borrower (you) obtain funding
Sign the purchase agreement between buyer and seller

Step 4: Apply for a Mortgage

Secure the documents necessary for loan underwriting. They may already have been obtained through Pre-Approval:
- ID and Social Security Number
- Employment History. Income, Assets
- Debts, Financial Blemishes
- Property Information (e.g. property taxes, sales price)
- Intended type of Mortgage and Borrowing Amount
Lender will then provide you with a loan estimate that encompasses…
- Closing costs
- Interest rate
- Monthly payment
Note: at this stage you are not yet approved nor denied a mortgage

Step 5: Mortgage Processing

Using the documents you’ve provided, as well as others that the lender may request later, your loan will be evaluated
It is important that you promptly respond to additional request made by the lender. It ensures a quicker route to approval and closing

Step 7: The Underwriting

Underwriter determines, based on financial responsibility and capacity to repay the loan, whether or not to accept your loan.
“Decision-making” stage involving the 3 C’s: Credit, Collateral, and Capacity
If approved, proceed to Step 8

Step 8: Loan Approval

Step 9: Closing of the Mortgage

Meet with Title agent at office or place of buyers choosing, bring cashiers check for costs associated with closing which was disclosed at an earlier date.
Be sure to ask any questions your lender any questions you may have
You and your lender will have printed closing disclosure confirming all costs, monthly and down payments
Congratulations! Your mortgage has been approved!