Getting pre-approved for a mortgage is an important step, but it is not the end of the process. Once you have your pre-approval, there are several more steps before you get the keys to your new home. Understanding what happens after mortgage pre-approval helps you stay prepared and avoid surprises.
The short answer: after pre-approval, you shop for a home, make an offer, complete inspections and appraisal, go through underwriting, get a clear to close and then close on your loan. Read our mortgage pre-approval checklist to prepare before you start.
1. House hunting
With a pre-approval, you know your price range, so you can shop for homes with confidence. Work with a real estate professional to find homes that fit your needs and your budget.
Keep your loan officer informed as you shop, especially if your budget or goals change.
2. Making an offer
When you find the right home, your agent helps you prepare an offer. The offer typically includes:
- The price you are willing to pay
- Your earnest money deposit
- Contingencies, such as financing, inspection and appraisal
- A proposed closing date
A pre-approval letter can strengthen your offer because it shows the seller you are a serious, prepared buyer.
3. Accepted offer and contract
Once the seller accepts your offer, you have a contract. At this point, your lender moves your loan from pre-approval to the full application and begins the formal underwriting process.
4. Inspections
Schedule a home inspection to check the home's condition. The inspection can reveal issues you may want to negotiate, such as repairs or credits. Your lender may also require specific inspections depending on the loan program.
5. Appraisal
Your lender orders an appraisal to confirm the home's value supports the loan amount. If the appraisal comes in lower than the purchase price, you may need to renegotiate, bring more cash to closing or, in some cases, cancel the contract (depending on your contingencies).
6. Underwriting
Underwriting is the lender's detailed review of your file. The underwriter verifies your credit, income, assets and the property to confirm everything meets the loan program's requirements.
The underwriter may issue conditions, which are items you need to satisfy before closing, such as an updated pay stub or a letter of explanation.
7. Clear to close
Once you satisfy all conditions, the lender issues a clear to close. This is the final approval that means your loan is ready, and your closing can be scheduled.
8. Closing
At closing, you sign your final documents, pay your closing costs and take ownership of the home. Bring a photo ID and any funds you need to close, usually by wire transfer or cashier's check.
What to avoid after pre-approval
To protect your approval, avoid these common mistakes:
- Do not open new credit cards or take out new loans.
- Do not make large purchases on credit, such as furniture or a car.
- Do not change jobs without talking to your loan officer first.
- Do not move large amounts of money around without a paper trail.
- Keep paying all bills on time.
Lenders may check your credit and employment again before closing, so changes can affect your loan.
Frequently asked questions
Is a pre-approval a guarantee of a loan? No. A pre-approval is a conditional review of your finances. Final approval depends on the property, appraisal, documentation and underwriting.
How long is a pre-approval valid? It depends on the lender and your situation. Ask your loan officer how long yours is valid and what could change it.
Can my loan be denied after pre-approval? Yes, if your financial situation changes, the appraisal is low or conditions are not met. Keep your finances steady until closing.
What should I do while I wait? Respond to your lender's requests quickly, keep your finances steady and avoid new credit or large purchases.
Ready to take the next step?
When you are ready, get a free quote or get pre-approved with Alex.
You can also call Alex Al-Ammar at (313) 992-9898 or email Alex@vestalending.com.
This article is for general information only. It is not legal, tax or financial advice. Loan programs, guidelines and eligibility depend on your credit, income, property and lender requirements. Speak with a qualified professional about your individual situation.
