The Six Steps of the Mortgage Process

The joy of finding just the right home can sometimes be accompanied by that creeping feeling of apprehension when it comes to obtaining a mortgage. It seems everyone knows someone that experienced a rough road when they purchased a home, and more often than not, the experience involves mistakes, delays, and confusion in the mortgage process. Don’t let your dream home lead to nightmares about financing.

Instead, let’s take a quick look at the mortgage process. In reality, the entire process consists of six steps. And while little details may vary from person to person, the process is both predictable and less scary than you might imagine. 

  1. The Mortgage Process – Six Steps to Success 1. Pre-Approval of your mortgage. Imagine a world where you go and pick out a home, make an offer, and suddenly discover that you can only get financed for about half of the offer you just contractually obligated yourself to pay. Sounds like the stuff of nightmares, right? Do you know, right now, how much home you can afford? If you answer yes, then well done. If you confidently answer no or are even unsure, then a mortgage pre-approval will help you understand the crucial numbers. The pre-approval process is a simple credit pull from the three credit reporting bureaus, along with a possible review of income documentation or bank statements. The lender uses this information to determine the loan amount for which you qualify. This will both help you settle upon a budget range and be a valuable piece of information to help negotiate your purchase of a home. Having a pre-approval letter is a great way to indicate to sellers that you are both serious and have the means to purchase the home. It also helps reduce surprises when it comes to your budget.
  2. Search for your next home. This step can sometimes come prior to the pre-approval, but the result is the same. Obtaining pre-approval is a great way to understand how much home you can purchase. Conducting a confident search for the right home in the right budget helps you narrow down your choices. Popular tools like Zillow can help you get started, but working with a local real estate agent who knows the area and market will be invaluable. The home search can be stressful, but it also should be a little fun. You get to locate the place in which your life will grow and change for the better.
  3. Make the offer. Making an offer on a home that you love is the most suspenseful part of the mortgage process. If you work with an experienced real estate agent, then you can work with a trustworthy guide in this part of the process. If you have been pre-approved and completed a diligent search for just the right place, this is the step where all of your legwork at the front can really pay off. Your real estate agent can come in handy when it comes to crafting an offer that stands out amongst others and can help give you the best shot at winning. They can also help you navigate items like earnest money deposits, appraisal waivers, and escalation clauses – in addition to the process that follows an offer being accepted.
  4. The seller counter offers or accepts your offer. This seller will most likely counter or accept your offer, depending upon their goals and desires. At times, your offer may even be rejected by the seller. If your offer is accepted, then congratulations. It is now time to move on to the next step in the mortgage process. If you were rejected, then either your offer was simply too low, the seller has a better offer, or the seller rejects something else in your contract such as a contingency. You may still have an opportunity to purchase the home that is dependent on the situation, but you will need to reevaluate your offer. Last but not least, do not despair if your offer is countered. It likely means that you are close enough to negotiate a deal, ultimately, but this may involve an increase in the price or some other change to your offer. It is not uncommon for negotiations to last for a couple rounds.
  5. The actual mortgage application process. Here again, pre-approval in the mortgage process can help make this part of the process much more smooth. This is the part of the process where you will work with the mortgage lender or broker to fund the accepted sales agreement. You may need to submit updated financial documentation for your debts, income, and assets. Your mortgage broker or lender will lock in your mortgage rate, and once a “clear to close” is received – your realtor will work with all parties to schedule the all-important closing date. Ideally, your real estate agent and mortgage broker or lender can work together throughout the process to help speed along the process.
  6. Closing time. The mortgage plot culminates at the close. This is the moment when ownership of the home passes from the previous owner to you. Expect to bring the necessary cash-to-close and sign a small mountain of paperwork. If all goes well, the mortgage application process propels the closing to a smooth finish. It is important to assemble the correct documentation, and doing so can cut down on the number of days that it takes to close. If your real estate agent, mortgage broker/lender, real estate attorney and title company have all done their work, then it’s time to celebrate!

If you feel nervous about the mortgage process, hopefully breaking it down into six simple steps will help you feel at ease. Working with the right real estate agent and mortgage broker will help cut down on dreams that suddenly shift to nightmares. At REALTEAM Real Estate, our agents are intimately familiar with their markets and have the experience to navigate the homebuying process. This includes helping you make the right choices and asking(?) the right questions. If you are ready to navigate the mortgage process and find your next home, get connected with a REALTEAM agent today



With the help of the RealTeam I recently purchased a home, though I worked directly with one of the team members the rest of back in the office were helping me behind the scene. They're very helpful during the entire process from the home search period, making appointments to get into homes, all way through to the day of closing. I was extremely impressed with the team and would highly recommend them.