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The mortgage process spans from initial application through closing, typically taking 30-45 days once a property is under contract. Understanding each phase clarifies what happens when and what documentation is needed. Timelines vary based on loan program, property type, and lender capacity. VA and USDA loans may take longer. Complex income situations require additional verification time.

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Phase by Phase

Pre-approval happens before looking at properties. It establishes purchasing power and signals to sellers that financing is likely to close.What happens:
  • Initial consultation with loan officer
  • Documentation submitted and reviewed
  • Credit report pulled
  • Income and assets verified
  • Debt-to-income calculated
  • Pre-approval letter issued
Timeline: 1-3 business days with complete documentationDocumentation needed:
  • Income verification (W-2s, tax returns, pay stubs)
  • Asset statements (bank accounts, investments)
  • Identification
Important: Pre-approval is based on a financial snapshot. If circumstances change during the home search (job change, new debt, large purchase), notify the loan officer immediately. Major changes may require updated documentation or affect loan eligibility.
The formal loan application is submitted after a purchase contract is executed. This is when the lender begins work on the specific property.What happens:
  • Formal loan application submitted with property details
  • Loan Estimate provided within 3 business days (required by law)
  • Appraisal ordered
  • Title work initiated
  • File assigned to processor
Timeline: 1-3 days after contract executionDocumentation needed:
  • Signed purchase contract
  • Updated income documents (if pre-approval is dated)
  • Property information
Processing is where documentation is organized, verified, and prepared for underwriting review.What happens:
  • Processor organizes complete loan file
  • Employment verified directly with employers
  • Bank statements and assets re-verified
  • Appraisal completed and reviewed
  • Title search completed
  • Any conditions from pre-approval addressed
  • File prepared for underwriting submission
Timeline: 10-12 days typicalDocumentation that may be requested:
  • Explanation letters for credit inquiries or large deposits
  • Updated bank statements
  • Additional income documentation
  • Proof of insurance
Underwriting is the formal review and approval process. An underwriter reviews the complete file and issues a decision.What happens:
  • Underwriter reviews complete file
  • All documentation verified against program requirements
  • Property value and condition confirmed acceptable
  • Decision issued: approved, approved with conditions, suspended, or denied
Timeline: 5-10 days for initial decision, additional time for conditionsAbout conditions: Most approvals come with conditions. These are typically requests for additional documentation to tie up loose ends (updated pay stub, letter explaining a deposit, proof of insurance). Conditions are normal and don’t indicate a problem.Common conditions requested:
  • Updated pay stub
  • Letter of explanation for various items
  • Proof of funds for closing
  • Insurance documentation
Clear to close means all conditions are satisfied and the loan is approved for funding.What happens:
  • All conditions satisfied
  • Final approval issued
  • Closing Disclosure prepared
  • Closing Disclosure delivered (minimum 3 business days before closing required by law)
  • Final figures confirmed
  • Wire instructions provided through secure channels
  • Closing scheduled
Timeline: 3 business days minimum between Closing Disclosure and closingDocumentation needed:
  • Signed Closing Disclosure acknowledgment
  • Proof of funds for closing
  • Government-issued ID for closing
Closing is the final step where documents are signed, funds are transferred, and ownership changes hands.What happens:
  • Final walkthrough of property completed
  • Closing documents signed at title company
  • Funds wired to title company
  • Lender funds the loan
  • Deed and mortgage recorded with county
  • Keys released after recording confirmation
Timeline: 1-2 hours for signing, same-day or next-day recordingWhat to bring:
  • Government-issued photo ID
  • Certified or cashier’s check (if not wiring funds)
  • Any outstanding documentation requested

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When the Appraisal Comes in Low

Appraisals determine whether the property value supports the loan amount. When an appraisal comes in below the purchase price, the transaction must be renegotiated or restructured.
Example: Purchase price is 400,000. Appraisal comes in at $380,000. The lender will only base the loan on $380,000, creating a $20,000 gap.
Options when this happens: Renegotiate purchase price Request the seller reduce the price to match appraised value. Sellers may agree to avoid losing the deal. Pay the difference Buyer brings additional funds to cover the gap between appraised value and purchase price. This requires available cash beyond the original down payment. Appraisal gap addendum Some contracts include an appraisal gap clause where the buyer agrees upfront to cover a certain amount if the appraisal falls short.
For example, a $10,000 appraisal gap addendum means the buyer will cover up to $10,000 of any shortfall.
Dispute the appraisal Provide comparable sales data to the lender supporting a higher value. Lenders may order a reconsideration of value or second appraisal. Success is not guaranteed. Cancel the contract If the appraisal contingency was included in the purchase contract, buyers can typically cancel and receive their earnest money back.
In competitive markets, buyers sometimes waive appraisal contingencies or include appraisal gap addendums to strengthen offers. This carries risk if the property appraises low and additional funds aren’t available.

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How to Stay on Track

Keep the process moving:
  • Respond to document requests within 24 hours
  • Provide complete bank statements (all pages, even blank ones)
  • Avoid major financial changes during the process
  • Keep copies of everything submitted
  • Maintain communication with loan officer
  • Schedule home insurance early
  • Verify wire instructions by phone before sending funds

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Communication Expectations

What to expect from loan officers:
  • Weekly updates at minimum
  • Same-day response to questions during business hours
  • Proactive notification of issues or delays
  • Clear explanation of document requests
  • Coordination with agents and title company
What loan officers expect:
  • Prompt response to document requests
  • Notification of any financial changes
  • Availability for employment verification calls
  • Timely scheduling of appraisal access
  • Questions asked when something is unclear

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