How Does a Mortgage Work? A Step-by-Step Guide from Application to Closing
Buying a home can be one of the biggest financial decisions you’ll ever make, and understanding how a mortgage works can help make the process less overwhelming. At Union Savings Bank, we’re committed to helping you every step of the way. Here’s a simple breakdown of what to expect, from your initial mortgage application all the way to closing day.
Step 1: Prequalification
Mortgage prequalification gives you a general idea of how much you may be able to borrow. It helps you explore loan options such as government-backed loans, conventional loans, and first-time homebuyer programs. During this step, you’ll review important qualifying factors with your loan officer, including your income and employment history, available assets (like savings for your down payment and closing costs), your credit report, and your current monthly debts (such as student loans, auto loans, credit cards, or leases). You’ll also discuss the type of property you’re looking to buy—whether it’s a single-family home, condo, townhome, primary residence, or investment property.
Step 2: House Hunting
Once you’re prequalified, it’s time to start your home search! Most buyers work with a licensed real estate agent who can help them find properties that match their goals, budget, and desired location. A good agent will guide you through showings, answer questions about neighborhoods, and help you make a competitive offer when you find the right home. During this phase, it’s important to stay in close contact with your loan officer so you’re ready to move quickly once your offer is accepted.
Step 3: Complete a Mortgage Application and Lock in your program
Once you find the perfect home and sign a purchase agreement, contact your loan officer to lock in your interest rate and loan terms (down payment, closing costs, loan payment, escrows) and complete a full mortgage application. You’ll submit documents like:
- W-2s and pay stubs
- Tax returns
- Bank statements
- Details about your assets, debts, and employment
- Additional underwriting requests based on your unique loan file
At USB, our experienced loan officers can help you navigate this step with ease. Call one today at 833-301-2505!
Step 4: Loan Processing
Next, our loan processors review your application, verify the documents, and prepare it for underwriting. They may request additional information, so it’s important to respond quickly to keep things moving.
Step 5: Home Appraisal & Inspection
Before approving your loan, an appraisal is usually ordered to confirm the home’s market value. You may also choose to get a home inspection to identify any major issues with the property, while the bank doesn’t require a general home inspection for a home loan it is typically encouraged by your realtor, we do require appraisals a majority of the time. Both steps can help protect your investment.
Step 6: Underwriting
This is where the underwriter reviews your entire application, credit history, financials, and appraisal. Their job is to ensure the loan meets all lending guidelines. They may ask for clarification or more documents—this is completely normal.
Step 7: Final Approval & Closing Disclosure
Once underwriting is complete, you’ll receive final approval and a Closing Disclosure that outlines your loan terms and closing costs. Review it carefully – you must receive this at least three business days before closing.
Step 7: Closing Day
This is the big day! At your closing appointment, you’ll:
- Sign the mortgage and loan documents
- Pay your down payment and closing costs
- Receive the keys to your new home 🎉
Congratulations—you’re officially a homeowner!
Union Savings Bank Is With You Every Step of the Way
Whether you’re a first-time buyer or moving up to your forever home, USB offers personalized mortgage solutions, competitive rates, and a team of experts ready to guide you through the process.
Have questions about applying for a mortgage? Contact us today or visit your nearest USB branch – we’re here to help you make smart, confident home financing decisions Find a Branch/ATM | Union Savings Bank.