Mortgage 101
What actually happens, in order.
Most people buy a home two or three times in their life, so nobody is expected to know this already. Here is the whole process, start to finish, without the jargon.
Pre-approval
We review your income, assets, and credit, and tell you what you can borrow. A real pre-approval means someone has actually looked — not a calculator estimate. Sellers in a competitive market will ask for it before they take your offer seriously.
Documents
The paperwork stage, and the one you control. Everything asked for exists to verify what you already told us. The faster it arrives, the faster everything after it moves.
Underwriting & appraisal
Your loan is reviewed in detail while an appraiser confirms the property is worth what you agreed to pay. Expect follow-up questions here — conditions are normal, not a sign something is wrong.
Closing
You receive your final numbers at least three business days before signing, so there are no surprises at the table. You sign, the loan funds, and the house is yours.
Get ahead of it
What to have ready.
Gathering these before you start removes about a week from the middle of the process.
- Two years of W-2s or tax returns
- Your most recent pay stubs
- Two months of statements for every account holding your down payment
- Photo ID
- If self-employed: business returns and a year-to-date P&L
- If equity is part of your story: grant documents and vesting schedules
Plain English
Terms you will hear.
| Earnest money deposit | A good-faith deposit, commonly 3% of the purchase price, delivered within three days of signing the purchase agreement. It is credited toward what you owe at closing. |
| Down payment | Your share of the purchase price, paid in cash at closing. Separate from closing costs. |
| LTV | Loan-to-value. Borrow $800k on a $1M house and your LTV is 80%. |
| DTI | Debt-to-income. Your monthly obligations divided by gross monthly income. |
| Escrow / impounds | An account that collects part of your monthly payment to pay property taxes and insurance when they come due. Lenders use both names for it. |
| Points | One point is 1% of the loan amount. |
| Mortgage insurance | May be required by the lender when you put less than 20% down. |
| Rate lock | Fixes your rate for a set window so it cannot move before you close. |
| Clear to close | Underwriting is done. You are cleared to sign. |
General information only, not legal, tax, or financial advice, and not an offer of credit. Your transaction may differ.
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First time through this?
Ask anything. There are no stupid questions in a process most people go through twice in a lifetime.