How Does The Mortgage Loan Process Work ?
1. PrequalificationPrequalification will give you a quick estimate of how much you can borrow for your mortgage. You’ll share basic financial information, including your income, savings and outstanding debts. There’s usually no fee to get prequalified, and you can apply quickly by phone or online. However, getting prequalified doesn’t guarantee you’ll qualify for the mortgage.
2. PreapprovalPreapproval is much more thorough than prequalification. The lender will review your financial situation, similar to when you officially apply for a mortgage. You may be required to pay an application fee.
- W-2s for the previous two years
- Pay stubs
- Proof of bonuses
- Your most recent federal tax return
- Two to three months of bank and investment statements (such as brokerage, 401(k), IRA, Roth IRA, 403(b) and pension statements)
- Profit and loss statements or 1099 forms (if you own a business)
- A list of your debts, including credit cards, car loans and student loans, along with your minimum monthly payment for each
- Canceled checks for your current rent or mortgage
- Social Security or disability statements
- Alimony and child support payments
- Bankruptcy discharge paperwork
3. ApplicationAfter you’ve found your property, you can formally apply for a mortgage. The mortgage application will ask you questions about the property and your financial situation. A typical application could ask for:
- The address of the home you want to purchase
- The type of home
- The size of the property
- The expected sale price
- An estimate of the home's value
- The annual property taxes
- The homeowners association dues
- The loan amount you want to borrow