Step by Step Guide to Mortgage Process

It is the policy of the government to encourage home buyers. This is the reason why it has sought to make the process of buying easy by providing easy finance to the buyer to carry out the transaction. However, the entire process of obtaining mortgage seems to be tiring and overwhelming to a vast majority of first time home buyers. The same process appears easy when you are aware of the steps involved in the mortgage loan.


This is the first step in mortgage process where the borrower provides his income and asset documents to the lender. These documents give the lender an idea as to how much money can be given to the applicant that he can return in equated monthly installments. The lender analyzes the credit score and the income to arrive at the decision of pre-qualification.


You formally apply for a mortgage loan by giving your financial statements and other related documents including the address of the property you want to buy and its estimated value. You also mention the loan amount that you want from the lender.

Loan Estimate

This is the document that is given to you by the lender upon application. It mentions the interest rate, the monthly installment you are expected to pay, and all the closing cost including the taxes and the insurance that are required to pay. You can move forward with the same lender or with another after comparing the loan estimate of different lenders.

Processing of Mortgage

If you decide to move ahead, the lender orders your credit report and the title report. It also gets an appraisal of the property you are interested in buying. Lender prepares the mortgage package if it finds everything in order.

Required Documents

Once you receive mortgage package from the lender, you are required to give your latest financial statements. You need to give two years W-2 and one month latest pay stub if you are salaried. On the other hand, you need to give two years tax returns in case you are self employed. In addition, you are also required to give last two months bank statement to the lender.


Once all formalities are completed, the lender sends your loan application file to an underwriter. He takes a look at all the documents to make sure all requirements have been met. He may ask for additional information or approve the loan.


This is the final stage of mortgage where the borrower gets the money for the loan amount and pays the balance amount referred to as down payment as well as other closing costs.


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