Skip to main content

The mortgage application process: what you need to know

minute read

    It can feel like there’s a lot to know before taking out a mortgage. Where to go, what documents you’ll need and the timeline may be a few things on your mind — especially if you’re a first-time homebuyer. But with some preparation, you’ll be well on your way to navigating this part of the homebuying journey.

    Although mortgage application timelines vary person-to-person, anywhere from a few weeks to a couple of months, shopping around beforehand and gathering your documents is a way to help get started.

    What is a mortgage?

    Let’s start at the beginning: a mortgage is a security agreement between a homebuyer and a lender used to finance a home purchase. A prospective homebuyer typically applies for a loan at a bank or other trusted financial institution by providing information about their finances and the home they’re looking to buy. The lender then assesses their qualifications and uses them to create the loan terms. Loan terms typically include the type and length of loan, amount financed, interest rate and other key details. The mortgage is the document that gives your lender a security interest in your home as collateral for the loan.

    What does the mortgage application process look like?

    Though it seems like a long task, it can be generally broken down in three simple steps:

    1. Prequalification
    2. Application, qualification, document preparation
    3. Closing - Sign the dotted line!

    What does it mean to prequalify for a mortgage?

    Prequalification is the step that typically comes before your official application and gets the mortgage process started. It’s important to note that a prequalification is not a definitive dictation of what someone’s mortgage will look like. Whether you prequalify online or in person, you’ll likely be asked for general information about your income, job, monthly bills and amount you have available for a down payment. In exchange, the lender provides you with a general estimate of the interest rate and mortgage terms you may qualify for. Sellers often require proof of a prequalification before allowing the buyer to even make an offer on a home.

    Then, when you feel ready, you can begin your official mortgage application.

    Mortgage application documents

    After understanding what type of mortgage you may qualify for, finding your new home and signing the purchase agreement — the legally binding document that puts you in contract on a home — it might be a good time to start your official application. This is when you provide the lender with the specific and detailed information about your finances, the home you’re looking to purchase and your down payment — either online or in person, depending on personal preferences and the services your lender provides. You’ll need supporting documents to verify everything, so you may want to prepare your mortgage application documents in advance to help expedite the application process. Here are some items you may want to have handy:

    • Recent pay stub(s)
    • W-2 or 1099 forms
    • Bank statements
    • Signed home purchase contract, which confirms that you’re under contract on the home and ready to move forward
    • If you’re taking out the loan with a co-borrower, then you’ll likely need copies of their documents and signature as well

    How long does a mortgage application take?

    Completing your application can take anywhere from a few hours to a few days depending on how long it takes for you to gather and submit the necessary documents, which is why many people prepare them in advance. The approval can come immediately or after a few days, and the underwriting process — when a lender drafts and processes the hard details of your loan — can take a few weeks. Once you secure your mortgage, it’s then that you can move forward on closing on your home.

    Do multiple mortgage applications hurt my credit?

    Many people prefer to shop around to compare mortgage rates from different lenders. It’s important to know that when you apply for a mortgage, the lender often makes a hard inquiry on your credit report, which gives the lender detailed access to your credit history. These hard inquiries do have the potential to impact your credit score. The good news is that multiple loan-related hard inquiries in a short period of time typically only result in a single "hit" to your credit score, because lenders know customers like to shop rates. This potential lowering is only temporary and typically small, so customers may feel they can shop for the best deal without worrying their score will tank.

    In summary

    As it turns out, the mortgage application process isn’t that intimidating of a process after all! By prequalifying and gathering your documents in advance, you’ll be on your way to homeownership before you know it.

    Take the first step and get preapproved.

    Have questions? Connect with a home lending expert today!

    What to read next