Homebuyers

Great, You’re Pre-Approved! Now It’s Time to Secure the Mortgage

Getting a mortgage pre-approval is a big step for homebuyers. It’s a prized letter confirming that a lender feels strongly about your ability to purchase a home and helps sellers take you seriously.

Then you find the right three-bedroom and your offer gets accepted. And the next thing you know, you’re picturing movers and paint colors and that first evening eating takeout in your new place.

While that’s hopefully in your near future, there’s still more work to be done to land a home loan. Pre-approval lets you shop for a property confidently, but it doesn’t guarantee you a mortgage. 

Instead, the nitty-gritty of the mortgage process begins after you sign a contract to buy a home. Here’s what happens following receiving a loan pre-approval letter and how to avoid surprises before closing day.

What is a mortgage pre-approval letter?

A mortgage pre-approval letter signals that you have shared enough financial information with a lender for them to feel comfortable estimating what you can likely borrow to purchase a home. However, it does not mean you will definitely get a mortgage.

“Your pre-approval letter will state that the pre-approval is not a promise or commitment to a loan, simply that you would most likely qualify,” said Justin Chau, a real estate professional at eXp Realty in San Gabriel, Calif.

In other words, think of pre-approval as a thumbs-up from the lender based on your credit, income, and debts. However, it’s not an absolute promise of funds.

Under contract for a home? Now the real work of getting a mortgage begins

Once the seller accepts your offer, your pre-approved mortgage file moves into full verification mode. That means you will finish the formal loan application and update financial documents so the lender can verify that nothing has changed.

This generally involves sending in more documentation.

“Speak to a lender to go over the steps it takes to get a loan,” said Los Angeles real estate professional Monty Iceman, CEO of MontyIceman.com. “Preferably, that lender is a referral from someone you know who recently purchased a home.”

To get you prepared, here are the most common paperwork buyers need to resubmit:

• Most recent pay stubs for income and credit verification
• Updated banking and investment statements
• Tax documents
• Purchase contract and title paperwork

Pro tip: Before you start home hunting, create and update a digital folder of these documents so you can respond quickly to lender requests. Include at least two years of W-2s as well as recent pay stubs and bank statements. Efficiency prevents bottlenecks and delays.

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What is underwriting?

Once the lender receives your financial documents, your loan file moves to underwriting. This is when the lender conducts a final, thorough review of everything you’ve submitted, from your pay stubs to your bank statements.

This is the stage where they verify that your income is stable, your credit still checks out, and the home you’re purchasing supports the loan amount. 

“The loan approval process includes making sure the property you have chosen appraises, that you can acquire proper insurance coverage, plus any last-minute issues that pop up with your home inspection,” said Iceman.

Chau cautions that even seemingly minor financial fluctuations can matter.

“Oftentimes, small changes to credit or debt-to-income ratios can affect your eligibility for obtaining the loan,” he said.

If the lender asks clarifying questions during this process, don’t panic. It is part of standard due diligence, not an alarm signal. So, remain responsive to any lingering questions.  

Avoid common mortgage mistakes

It’s important to avoid making any big mortgage mistakes before your home loan is approved. Think of this period as a time to put your finances in a serious deep freeze. Any change in your financial picture can alter how much a lender is willing to let you borrow and potentially throw a wrench into approval.

Here are the biggest pitfalls buyers should avoid:

• Making any large purchases
• Applying for new credit cards
• Taking on new furniture or appliance financing or other new debt
• Co-signing any loans
• Making large unexplained deposits in your bank account
• Changing jobs, cutting down on your hours, or altering your pay structures without speaking to your lender first

“The best way to ensure that you are most likely to obtain the loan is to refrain from spending on luxury items or opening new lines of credit,” said Chau.

Remember, predictable, paper-trail-safe financial behavior is your friend during this time.

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Timeline and last-minute surprises to expect when trying to get approved for a mortgage

Most buyers can expect the mortgage process to take about 30 to 45 days. The exact timing will depend on how busy your lender is, the timing of your appraisal, and how quickly documentation comes together and you’re able to answer any lender questions.

In hotter markets or with more complex financial profiles, that timeline can stretch further.

But even when things look smooth, last-minute surprises can appear. The most common are:

• An appraisal coming in lower than the offer price
• A verification call to your employer, revealing a recent income change
• A late credit pull showing new debt or hard inquiries
• A wire fraud alert requiring identity confirmation
• Delays in title clearance may occur if there are old liens on a property or if the records are hard to track down

If something pops up, do not panic. These issues can happen. Most are solved with clarification or an extra document or two.

Now you’re “clear to close” on your home

Clear to close is the lender’s final approval. It means the loan is fully vetted, the property checks out, and the closing documents are ready.

At this point, your job is relatively straightforward. Make sure to review your closing disclosure, verify the wiring instructions with your lender by phone to prevent fraud, and plan to address any final walk-through issues before funds are released.

Once you sign your mortgage at closing, the loan funds are disbursed. Then the home is officially yours.