Ready to buy a house but just not sure how the whole home purchase process works? On this page of the Ultimate Guide to a Home Purchase, you will discover how the mortgage process works from the very beginning to the end.
The goal of this guide is to demystify the home purchase process so that when you are ready to start your loan, you'll have a better understanding on how this purchase process works.
Note: If you are just interested in seeing the stages of the home loan process, please download my companion printout called the 6 Stages of the Home Loan! Tap the button below to go direct to the PDF. I've got more home loan printouts available here.
Table of Contents: On desktop and most tablets, you will find a reference Table of Contents on the right. On mobile, you will find it available at the bottom of each article. Click on a link in the TOC and you'll jump to that section of the article.
Discovering Your Loan Officer - The Phone Call
Before starting a loan application, consider doing a bit of research first. You are already a step ahead of the rest by reviewing this home purchase process guide. The first step is to consider who you will use as your Loan Officer. There are thousands of sites out there begging for your loan application. Popups, online digital ads, commercials, calls and they may even come knocking on your door... but who are these people?
Did you know that if you submit a questionnaire on one of these major sites, they send your answers to many companies and loan officers? It isn't uncommon for a questionnaire to cause hundreds of phone calls, emails and texts as everyone begs for your attention. What if there was a better way?
By being here, you are learning directly from me, Scott Buehler, a loan officer that does not sell your data to 3rd parties. Whether you fill out a questionnaire, submit a mortgage question or text directly (435) 590-1019, the outcome will be predictable as only I, or a member of my direct team, will be the ones reaching out to you.
I also hope that this guide will help you learn about home purchase financing, mortgage options, things to watch for and ultimately take away a lot of the uncertainty, doubt and anxiety of beginning this mortgage process.
Scott Buehler: Your Guide to the Home Purchase Process
Ready to begin? I would be honored to be the person you choose to guide you through the home purchase process. We will discuss your concerns, goals, mortgage options, financial future and everything in-between.
Once your choice is made to use my services, send a text to 435.590.1019 to set up your first phone call. During this call, we will go through a discovery phase where I'll ask you some basic questions about your finances, discuss mortgage options, down payment solutions and so much more.
During this call, I invite you to ask me as many questions as you'd like. This beginner's guide to homebuying can't possibly answer everything because every buyer is different with a unique set of circumstances. Let's talk through it and make a home purchase plan!
But Scott, what if I dislike phone calls? I do strongly encourage this introductory phone call. A call is the fastest way to get direct answers and to establish trust in our business relationship. After the first call, everything else can be handled via texting or email if you'd like.
Exceptions are made! If there are special considerations such as high anxiety, hearing / cognitive impairment or any other reason, I'd love to help you in any way that is comfortable. Just email or text me at any time, let me know we need to skip our introductory phone call (no reason needed). Once made aware, I'll happily proceed with the communication method of your choice.
Determine How Much You Can Afford
During our call, I'll be asking for specifics regarding available funds for down payment, income for all borrowers, figure out monthly debt commitments and more. These questions are asked to help me understand your debt-to-income ratios.
In order to prepare, I encourage you to write down all of your debt including the minimum monthly payments on credit cards, vehicle loans, student loans, child support, private bank loans and anything else that requires monthly payment.
Along with debt, take a look at your paystubs to provide an accurate picture of your income including discovering your average hours worked per week. It's better to tell me your real hours per week or real salary to receive a more accurate estimated qualification calculation of your max home purchase price.
Using a Mortgage Calculator
If you'd like to see estimated monthly payments to determine your goal purchase price, pay a visit to my monthly mortgage payment calculator. On there, go ahead and do some calculations on different home purchase amounts to make a determination of your ideal mortgage payment. This calculator is not 100% accurate but will certainly give you a good starting point.
After our call on Step 1, I will begin doing various calculations to determine a safe maximum mortgage payment based on the numbers you've provided.
From here, I will write a summary email and provide you with my estimations and findings. In that email, I will make recommendations on loan programs that you qualify for, explain my findings and also provide a link to officially apply for a mortgage.
I'm happy to send you loan scenarios based on various mortgage programs, changed purchase amounts, changed down payment amounts, interest rate changes with buy down points and so much more. Just ask!
What is a Loan Scenario? A loan scenario is an estimation and calculation of your full mortgage payment including principal, interest, homeowner's insurance, private mortgage insurance and property taxes based on a loan program.
You may receive multiple loan scenarios throughout your home purchase process to give you the data you need to help make a mortgage product decision. I use loan scenarios to help answer questions like figuring out the difference between down payment assistance vs bringing a down payment, or figuring out the payment difference between a 15-year, 20-year or 30-year mortgage.
Get Pre-Qualified or Pre-Approved
The next step in your home purchase process is to officially apply for a mortgage. Click here for my mortgage application. Here's my mortgage application guide that will walk you through the entire mortgage application process, step by step.
Once your application is submitted, a soft credit pull is performed that will provide me with up to two borrower's credit reports. This credit report will confirm the numbers you've provided during our initial call.
You'll be sent to a new page that will automatically determine documentation I will need to complete your loan application. Depending on your employer, bank and other factors, you may need to provide the following for each borrower on the loan:
- 30 days paystubs.
- 2 years W-2s for all jobs worked.
- 60 days bank statements showing funds for down payment.
- Annual award letters: Social security, pension, etc.
- Quarterly or 60 days retirement fund statements.
- 2 years tax returns (rental income, self-employment and other reasons).
You may see other requests in your loan portal, but they are likely not as urgent as providing your income documentation.
Some employers and banks allow loan application automation. If you don't see an item being requested from the above list, my loan application software may have already obtained the information with your permission.
The Pre-Qualification Letter
Once I have your credit report and income documentation, I will review everything, calculate your qualifying monthly income and will prepare your loan for finding your safe loan maximum.
Loan Officers have a few automated methods to determine eligibility depending on the loan type. It is through this automated system where we can determine your safe home purchase price and loan amounts.
With this number, I will issue a Pre-Qualification letter that you can provide to your real estate agent or REALTOR®. Your agent will them provide this pre-qualification letter with your Real Estate Purchase Contract.
Want to learn more about a pre-qualification letter?
The Pre-Approval Letter
Many agents and various professionals in the real estate industry use the pre-qualification and pre-approval terminology to mean the same thing. In the mortgage world when dealing with experienced Loan Officers, there is major difference.
While the pre-qualification letter is issued when I've completed a full income review, debt review and submitted your loan through our automated methods to determine eligibility, the pre-approval letter goes a step further.
With pre-approval, your complete loan is submitted for Underwriting review before home shopping has begun. This is a considerably longer process and requires nearly all required mortgage paperwork from you beforehand.
I usually go for the pre-approval process when I find issues with your loan that may result in an adverse action. Every so often, we will come across a home loan that will require underwriter discretion, a full review or additional research.
Time permitting, if it is determined that your loan needs pre-approval, we will submit your loan for Underwriting review, get a conditional approval and then issue a pre-approval letter that mentions your loan has undergone Underwriting review.
Discovering Your Real Estate Agent
With your pre-qualification or pre-approval letter in hand, now it is time to find a real estate agent. I encourage you to do additional online research for exceptional reviews or find an agent that matches your personality.
If it is your first time buying a home in a city that is new to you, you should have a real estate agent by your side to help you with the home shopping and purchase contract process. In most states including California, Nevada, Arizona and Utah, the seller is the one who pays your agent's commission. There's exceptions to commission compensation with certain transactions like buying a FSBO, a For Sale By Owner property. Your agent can help you through that process if needed including further negotiations.
Your agent is the one who will walk you through step 5 below. They will also be the one that will recommend services like a home inspection or point out issues they see with a property you are interested in.
Need Help Choosing a Real Estate Agent?
Please feel free to ask me for a recommendation! I'd be thrilled to offer you a list of at least three agents I'd recommend who have proven themselves to being exceptional in past transactions.
Immediately upon reaching out to your chosen real estate agent, you will notice that they will ask if you've spoken to a lender and they will request your pre-qualification letter. Real estate agents prefer to work with home buyers who have gone through the home loan purchase process before they will begin providing listings, showing you homes and more.
Why do I need to speak to a lender first? Imagine being the agent who doesn't require the pre-qualification letter for just a moment. Someone calls them up, says they want to buy a home with financing and the agent immediately begins showing them homes and listings. After weeks of various offers being submitted, rejected, more submitted, rejected and finally, an offer is accepted. Then the next step comes and the agent discovers that the borrower is ineligible for whatever reason. Real estate agents need to know what you can qualify for in order to effectively balance their time with multiple clients.
This is why step 3 is crucial. Real estate agents may not be able to assist you until you've gone through the loan pre-qualification process.
Home Shopping - Make an Accepted Offer
You've found a real estate agent or REALTOR® that you love, you've been provided listings and now you have begun scheduling showings, congrats! You are on your way to finding that perfect home for you and your family.
Be sure to check out my house hunting guide that is full of tips and resources!
Check Out My House Hunter Checklist
When you are on your journey to finding that perfect home via this Beginner's Guide to Home Buying, I recommend downloading and printing several copies of my House Hunter Checklist below.
This checklist will allow you to check off features and write notes about the properties you see with your agent.
Once you place an offer on a property and get your offer accepted by the sellers, you are well on your way to home ownership!
Once both you, the buyers and the sellers have signed and agreed to your Real Estate Purchase Contract (REPC), it's time for me to get involved again! As your Loan Officer, I need to receive this REPC as fast as possible to officially begin your loan.
Scott Buehler Receives the Purchase Contract
Once I have your executed REPC, there's a lot that happens on my end. The most important part, we have an official property address and have all of the elements required to officially begin your loan application.
Once I have your REPC, I will go into your loan, begin your loan application and open a line of communication with you that we will address in Step 7 below.
During this time, your real estate agent will also go over some options with you including having a home inspection completed to uncover potential issues with the property.
I will also begin reaching out to the title company to begin title insurance for the property address in your contract. Most of this is handled behind the scenes without much (or any) borrower involvement.
Finalize Loan Program Choice - The Loan Estimate
Once your loan application is started, I have three business days to issue you a Loan Estimate that will break down a full estimation of loan fees, closing costs and so much more.
During this stage of the home purchase process, it is important we communicate to finalize your mortgage solution decision from Step 2 and Step 3 above. I will confirm with you the loan program, down payment and estimated cash to close to finalize your home loan.
This is an excellent time to lock in your interest rate! Now that we have an official loan started, we can discuss the current interest rates, discuss points to buy down the rate and get your rate locked in to protect yourself from worsening rates.
Interest Rate Locks
A mortgage rate lock, also known as rate protection, keeps your interest rate from rising between the time you apply for a home loan and the time you close on your new loan. If interest rates happen to go up during the period when your rate is locked, you get to keep your lower rate. On the other hand, if you lock your rate and interest rates go down, you may not be able to take advantage of the lower rate without additional fees.
Once you've made your decision to go ahead and lock in your rate for a more predictable outcome or to float your rate (leave the rate unlocked and subject to market changes both positive or negative), we can then work on issuing your Loan Estimate.
For borrowers who have authorized eSignatures during the application stage of the purchase process, your Loan Estimate will be delivered to your Loan Portal. For borrowers who decided to opt-out of eSignatures, your Loan Estimate will be sent via the postal service for signature(s).
Your Loan Estimate is simply an estimation of fees. I typically quote fees on the higher end for qualification purposes. It is not unusual for the finalized fees and actual mortgage payment to wind up lower than the Loan Estimate.
Home Appraisal is Ordered
Once you've acknowledged your Loan Estimate in the purchase process step above, we will begin ordering the appraisal for the property. Depending on available time, I like to order your appraisal after you've had a chance to review your private home inspection from Step 6. The home appraisal, which you will receive, is your first major cost to the home loan.
Whether your loan closes or not, your completed home appraisal will will need to be paid by you.
The appraisal is an independent estimate of the value of the property you are buying. The appraiser is a member of a third party company and not directly associated with the lender you work with.
Your appraisal is what determines your maximum mortgage amount for your home loan. See below for an important note about low appraisals.
About Low Appraisals
What happens when an appraisal comes in below your offer price? Upon review of the appraisal to verify accuracy, you will only be able to finance based on appraisal value. Any amount that cannot be financed will either need to be renegotiated or paid as cash to close at settlement.
As an example, if you have an accepted REPC to purchase a property at $300,000 with a minimum down payment determined by mortgage guidelines but the appraisal shows a value of $290,000. We would need to change the value on the loan to $290,000 leaving an extra $10,000 funds required to close. This would be added on top of your down payment, loan fees and closing costs.
Where possible, you should consider renegotiating your offer with a counteroffer at the lower price unless you've already agreed to pay the difference as part of your offer.
Appraisals can take a week to much longer depending on appraiser availability. It is important to order the appraisal as soon as possible to prevent delays in closing.
Submit Paperwork for Underwriting Review
While we wait for your Appraisal (Step 8), I will be sending you a list of documentation requests to prepare your loan for Underwriting review.
Once received, please prioritize the email to submit all or most of the documentation that has been requested. Here's some of the more common requests you will see:
- Supervisor name, job title, email and phone number for a Verification of Employment for all borrowers.
- Policy start for Homeowners / Hazard insurance (do not pay).
- Representative name, email and phone number for Homeowner's Insurance Policy.
- Annual award letters: Social security, pension, etc.
- Updated income statements including paystubs, bank statements, etc.)
- Various Letters of Explanation.
Not to worry, I will explain a lot of these requests in my email to you.
The Conditional Approval
Once your loan has been in the Underwriting queue for approximately 2-4 business days, we should have a response after they have reviewed your file.
If everything goes according to plan, we should have a Conditional Approval from Underwriting. At this stage, there will likely be a few more documentation requests, explanations and finalization of work we do behind the scenes to complete your loan file.
Once all requests are completed and uploaded, we resubmit your loan for Final Approval.
Initial Closing Disclosure
Once we have conditional approval, we will be sending you the initial Closing Disclosure (CD) to your Loan Portal login. This document is similar to the Loan Estimate, but provides any clerical corrections, final loan details about the mortgage you have selected, loan terms, monthly payment, updated fees and more.
Once you review your initial CD, you'll need to acknowledge receipt by signing.
The Initial CD is typically not 100% accurate or final. This document, once you've signed, starts the mandatory 3-business-day waiting period to settlement and closing.
Final Approval & Settlement / Closing
Congratulations! You've reached Final Approval / Clear to Close!
Once we receive Final Approval in your home purchase process, you'll receive a call, text or email from me to let you know the excellent news!
From here, we schedule a signing appointment at title.
During the required waiting period, the closing department begins entering finalized numbers for your loan, balancing these numbers with title and performing various checks and verifications of your loan.
Once title verifies that our numbers match theirs (balance), we issue the final Closing Disclosure and order the documents package that is delivered to title for your signing appointment.
Closing / Signing Appointment
I attend most closings. I'll be available to immediately answer any questions that come up during your closing.
After your closing appointment, title will send all documents back to us, the closer verifies all documents, issues an email with "Prior to Funding" conditions and finally, funding is authorized.
Title will then do the work on their end to distribute funds, record your loan with the county and email us once it is officially recorded.
Recording
Once your purchase is recorded with the county, the property is officially yours! It is at this point you may call your real estate agent to arrange keys delivery.
Note on Your Home Loan Experience: Throughout the home loan purchase process, I will be there as your Senior Mortgage Consultant to guide you.
Much like this guide, I have a fine-tuned system in place to guide first-time homebuyers along the journey to home ownership.
As you can see, a lot is involved in the home loan process. Making the right choice in your Loan Officer can be the difference between a smooth transaction to a stress-ridden experience.
Thank you for choosing me and my website for your mortgage needs!
