Accounting & Finance
9 Steps in the Mortgage Loan Process Timeline
What if your dream home was just a few steps away?
Getting a mortgage is easier than you think. It all comes down to understanding the mortgage loan process timeline.
Want to know what these steps are so you can get started on your mortgage? Keep reading to discover the answer!
1. Building Credit
Believe it or not, the mortgage process starts before you apply. In fact, it starts with you doing everything in your power to boost your credit.
On the most basic level, this means paying your bills on time. We recommend setting up automatic payments so you never have to worry about missing payments and losing credit.
This is also a great time to sign up for a free credit monitoring service. The service can let you know what your current score is and how you can improve it (including by disputing any inaccuracies on the report).
If possible, this is a great time to pay down or pay off some old debts. This improves your raw credit score and gives you a better debt-to-income ratio which may help with the application.
2. Don’t Rock the Boat
Getting your credit score high is one thing. Keeping it high without rocking the boat is something else.
One of the main things a lender wants from an applicant is stability. They hope to see you as an investment who is unlikely to jeopardize his own financial future.
Try not to change jobs before or during the application process. This may make lenders worried that you won’t have the steady stream of income to pay for a house.
Along those lines, make sure to focus on homes you can reasonably afford when you make the search!
3. Make the Application
After you have found a home you wish to buy, you need to fill out the application. This is what gets the ball really rolling.
This may sound simple, but the application is actually really long and complex. It’s important to fill it out completely and honestly to maximize your chances of loan approval.
You don’t necessarily have to tackle this part alone. It’s always possible to ask your mortgage broker for help.
With their help, you can maximize your chances for approval while minimizing the odds of accidentally committing loan fraud.
Keep in mind that the lender will pull your credit report during the application and may ask you some questions. As always, you should be upfront and honest with their inquiries.
4. The Pre-Approval
Your ultimate goal is to get loan approval. Before that happens, though, you must navigate the world of pre-approval.
As with other credit applications, your initial mortgage application is processed by a computer. This means that you can get a tentative answer within minutes.
However, “tentative” is the important part here. While pre-approval is a very good sign of your odds, there are still many additional steps to take before full approval. Furthermore, getting pre-approval is not a guarantee that you will be fully approved when the time comes.
5. All the Paperwork
We have placed paperwork in the fifth slot of our timeline. However, paperwork is a continuous part of the process typically from the moment that you submit the application.
In short, you may be required to provide several different items that help verify your income and employment status. This includes tax returns, pay stubs, bank statements, and other items pertaining to your financial history.
You have some flexibility in when you provide the paperwork. However, you can improve your odds by presenting it sooner rather than later.
For example, lenders are legally required to give you a loan estimate before requesting such paperwork. But providing the paperwork early can speed up the pre-approval and also provide a more accurate view of your employment and finances.
6. Inspecting the House
With the pre-approval in hand and much of your paperwork done, it’s time to inspect the house. In many ways, this is the most important part of the entire process.
Your lender may require that you have the well, septic system, and foundation inspected. You will also need a termite inspection and an overall appraisal.
Certain lenders may require additional inspections on top of these. And the exact inspections required may vary due to the type of loan you are taking out (such as an FHA loan, VA loan, USDA loan, etc.).
And, of course, you may choose to have other inspections of your own accord. This is basically the last chance to make sure the home is safe and valuable before you make the purchase.
7. Underwriting Advantages
After you have pre-approval and completed inspections, the next step sends the loan to the underwriter. However, you can effectively skip ahead to this if you bring the right paperwork early.
The underwriting process is when a human being compares all of the paperwork you provided and makes sure that you are a good candidate for the loan. This takes care of situations where someone may have been pre-approved but not actually qualified.
If you bring your paperwork in at the time of the application, you may be able to get an early underwriting approval instead of having to wait for it later in the process. Once you are cleared to close, it’s on to the final step.
8. The Closing Process
Hope you’re ready for a lot of signing because it’s closing time!
On closing day, be sure to bring ID, paperwork, and any necessary money. The loan officer will do most of the real work while you sign form after form.
You should get an explanation of the closing process from a settlement company or other organization. When the settling company has gotten the money and paid the seller, both sale and deed are recorded.
Just like that, you’ve become a homeowner!
Mortgage Loan Process Timeline: Happily Ever After
Now you know about the mortgage loan process timeline. But do you know everything you need to buy a house?
We specialize in helping buyers, sellers, and investors in every aspect of real estate. Before you apply for a mortgage, check out our “Buy” section today!