If you’re buying a home, understanding the mortgage process helps you avoid surprises and stay confident from application to closing. Here’s a clear breakdown of how it works.

 Pre-Qualification vs. Pre-Approval

Pre-Qualification

• Quick estimate based on self-reported information
• Not verified by documentation
• Gives you a rough price range

Pre-Approval

• Lender verifies income, credit, assets, and debt
• Stronger when submitting offers
• Required by most sellers

Getting pre-approved is the smart first step.

 Choose the Right Loan Type

Common mortgage options include:

• Conventional Loan – As low as 3% down, stronger credit typically required
• Federal Housing Administration (FHA) Loan – 3.5% down, flexible credit guidelines
• Department of Veterans Affairs (VA) Loan – 0% down for eligible veterans
• United States Department of Agriculture (USDA) Loan – 0% down for qualifying rural areas

Your lender will help determine which program fits your situation.

 Mortgage Application

Once you’re under contract, you’ll complete a full mortgage application.

You’ll need:

• Pay stubs (last 30 days)
• W-2s or tax returns (2 years)
• Bank statements
• ID and Social Security number
• Employment verification

Avoid changing jobs or making large purchases during this time.

 Loan Processing

The lender’s team:

• Verifies your documents
• Orders the home appraisal
• Reviews your credit
• Confirms employment

This stage ensures everything meets lending guidelines.

 Appraisal

The lender orders an appraisal to confirm the home’s value.

If the appraisal:

• Matches or exceeds purchase price → move forward
• Comes in low → renegotiate price or adjust terms

The lender will not finance more than the appraised value.

 Underwriting

The underwriter reviews the entire loan file.

They may request:

• Additional documentation
• Clarifications on deposits
• Updated pay stubs

Once approved, you’ll receive “Clear to Close.”

 Closing

Before closing, you’ll receive a Closing Disclosure (CD) outlining:

• Final loan terms
• Interest rate
• Monthly payment
• Cash needed at closing

On closing day:

• Sign final documents
• Pay closing costs
• Receive the keys 

What Makes Up Your Mortgage Payment?

Often referred to as PITI:

• Principal – Loan amount repayment
• Interest – Cost of borrowing
• Taxes – Property taxes
• Insurance – Homeowners insurance

Some loans also include mortgage insurance (PMI or MIP).

Important Mortgage Tips

• Don’t open new credit accounts
• Don’t finance furniture before closing
• Don’t deposit large cash amounts without documentation
• Keep your employment stable

Even small changes can delay approval.

Jai Towns l Realtor 

Align Right Realty 

mobile (813) 298-5842