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What Are The Process Involved In A Home Mortgage Loan?

Have you encountered the words appraisals? Titles? What about escrow? Mortgage terms can be confusing since most of us aren’t buying and selling homes every day. Here, we provided means to understand how mortgage process works. These may vary depending on which bank or loan company you are dealing but these steps can pretty much give you the idea how availing home loans work.

What are the processes in availing home loans?

Step 1: Mortgage pre-qualification.

Getting pre-qualification not only determine your capacity pay but it also shows that you are a serious buyer. It is also the easiest way to obtain early assurance that you comply with the vital credit requirements for the specified home loan cost.

Step 2: Down payment

During the mortgage loan process, it is important to determine how much you plan to use for your down payment. It could also be a determining factor as to how big the house you are planning to buy during the mortgage loan process.

Step 3:  Mortgage rate lock-in

Mortgage loan rates may change daily. To ensure that you receive the rate you were quoted, you may elect to lock in your rate by paying an upfront authorization fee. Note: There is no upfront fee for locking in a rate unless the lock period is more than 90 days.


Step 4: Home loan application
The mortgage loan application form asks for detailed information about you, the property you wish to buy, and requires documentation about your personal finances. During the application process, the lender will provide a Loan Estimate (LE) outlining the closing costs for the loan. By law, the lender is required to have you review and approve of the LE before they can proceed with your application.

Step 5: Mortgage loan processing and appraisals
During this step in the mortgage process, the lender will collect the information needed to process your loan. Your property will be appraised to determine its value. The appraiser will visit the home and will also consider sale prices of comparable houses in the neighborhood.

Step 6: Receiving a home loan approval
The lender will review the completed application and verify information included to make a credit decision on the application. As part of this process, the lender will review your credit report and other financial details to evaluate the risk of lending money.

Step 7: Escrow and title documents preparations
Also known as pre-closing, at this point, a title company, or designated attorney, will hold any funds and documents until all conditions of the mortgage approval are met. Title work will be prepared, including a title exam, to ensure the title to the property is clear. Other documents such as the Mortgage Note and Deed will be prepared.

Step 8: Closing and signing the final paperwork
The home loan documents will be sent to a title company or attorney’s office for the buyer and seller to sign. Any additional down payment and closing costs will be due at this time. Closing costs normally include appraisal fees, title exam, settlement fees, title insurance, credit report fees, and application fees.

Step 9: Title transfer
When all funds are collected and the contract has been verified, the title is transferred and the purchase price funds are disbursed (given) to the seller. After the title is transferred, you’re a homeowner – congratulations! You can take over the keys to your new home.

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