What Happens From Preapproval to Closing?

Your path from “I want a home” to the keys

1. Get organized. Gather pay stubs, W-2s or tax returns, bank statements and your ID. Check your credit reports. Our document checklists show what to collect for your situation.
2. Get prequalified, then preapproved. A prequalification is a quick estimate based on what you tell a lender. A preapproval goes further: the lender checks your credit and documents and says how much it may lend, subject to conditions. Sellers often want a preapproval letter with your offer. See prequalification vs. preapproval.
3. Shop for a home and make an offer. Your real estate agent helps you write the offer. Once the seller accepts, you usually put down earnest money: a good-faith deposit, often held by a title or escrow company, that later counts toward your cash to close. The amount varies by market and contract.
4. Apply for the loan. You give the lender the property address and your full application. The lender must give you a Loan Estimate within three business days of receiving your application. It shows your rate, payment and costs. Lesson 7 shows how to read it.
5. Lock your rate. A rate lock holds your interest rate for a set time, commonly 30 to 60 days (it varies). Until you lock, rates can change every day. Ask how long the lock lasts and what happens if closing runs late.
6. Appraisal and inspection. The lender orders an appraisal to confirm the home’s value. A home inspection is different: you usually choose and pay for it to find needed repairs. Read both reports.
7. Underwriting and conditions. An underwriter checks your income, debts, savings, credit and the property. You will likely get a list of “conditions,” such as a letter explaining a deposit or a newer pay stub. Answer them quickly and completely.
8. Clear to close. When every condition is met, the lender issues a “clear to close.” You must receive your Closing Disclosure at least three business days before closing. Compare it line by line with your Loan Estimate and ask about any change.
9. Closing day. Bring a government photo ID. Your cash to close usually goes by wire transfer or cashier’s check. Warning: scammers send fake emails with “new” wiring instructions. Before you wire money, call your title or escrow company at a phone number you already know (never one from the email) and confirm the details. Then you sign and get the keys; exact timing varies by state and contract.
10. After closing. Your first payment is often due on the first day of the month after one full month passes. For example, close in March and your first payment is often due May 1. The company that collects your payments, called the servicer, may change later; you should get a written notice if it does. Keep your closing papers in a safe place.