The more you're prepared, the smoother the loan application process

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Step 1: Prequalification & application

1)     Look at your budget

Ask yourself what you can comfortably afford while still meeting your financial obligations and goals.

2)     Meet with your lender

Work with your lender to get a prequalification letter that you can share with your real estate professional when you start shopping for a home.

3)     Submit your application

Submit the fee to process your application and get the ball rolling.

Thinking ahead

Build up your credit, or beef up your savings well in advance of applying for a mortgage. Lenders like to see no delinquencies within the last two years.

Step 2: Conditional approval

1)     Provide documentation

If you get a conditional approval, you’ll have to confirm your employment status, income level, assets, debt info, etc.

2)     Check your inbox

Watch for a conditional approval letter to ensure that your mortgage amount and savings will cover the purchase price and closing costs. Also, clear any conditions you must meet for approval.

3)     Look at the price tag

Make sure you get an appraisal and that the appraised value of the house you want to buy is equal to or greater than the asking price. The bank will not loan you more than the house is worth.

Preparing for paperwork

Don’t make any major purchases or open new lines of credit for a few months before and during the application process.

Step 3: Final approval

1)     Set realistic expectations

Because of the level of detail involved, it takes time for the underwriter to examine all the necessary documentation before approving your application.

2)     Stay connected

Be prepared to get a few phone calls from your lender as more info might be needed.

3)     Check your inbox

Keep an eye out for your final approval letter—you’re approved!

Avoiding delays

Acquiring new debt in the months prior to or during the application process might raise concern with your lender and could result in your loan being delayed.

Step 4: Closing

1)     Sign your documents

Sign all your final loan documents.

2)     Transfer down payment

It’s time to transfer certified funds for your down payment.

3)     Pat yourself on the back

Congratulations, you did it—you’re official a homeowner!

Setting a date to close

The time it takes to close can vary. Have a clear conversation with your lender to set realistic expectations for a comfortable closing date.

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The material provided on this website is for informational use only and is not intended for financial or investment advice. Bank of America and/or its affiliates, and Khan Academy, assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment options.

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