The mortgage process, step by step

1. Application

The mortgage process officially begins with your loan application — the Uniform Residential Loan Application (URLA), also known as the 1003. You'll provide personal information, employment history, income, assets, debts and the property address.

Once you submit a complete application, the lender has three business days to issue a Loan Estimate. The application also triggers a hard credit inquiry. This is why you should have a specific property in mind (or be under contract) before applying — if you're just exploring, a pre-approval based on a soft pull is less impactful.

2. Loan Estimate

The Loan Estimate (LE) is a standardized three-page form that shows your loan terms, projected monthly payment, and estimated closing costs. By law, it must be issued within three business days of your application.

Review the LE carefully:

• Confirm the loan amount, rate and term are what you discussed
• Check the estimated monthly payment (including taxes and insurance)
• Review Section A (origination charges) — these fees cannot increase
• Compare Section B/C (services) to the lender's preferred provider list
• Note the cash to close estimate

The LE is not a commitment to lend — it's an estimate based on unverified information. But lenders are bound by tolerance rules: most fees in Section A cannot increase at all; others can increase by no more than 10%.

3. Loan processing

A loan processor collects and organizes the documents needed for underwriting: pay stubs, W-2s, tax returns, bank statements, asset accounts, and the purchase contract. They may request additional documentation as they review what you've provided.

Respond to any document requests immediately. Delays in processing are the most common reason closings get pushed back — and most of them are caused by borrowers not responding to requests quickly.

During processing, the lender also orders the appraisal, and the title company begins the title search.

4. The appraisal

The appraisal is an independent assessment of the property's market value by a licensed appraiser. The lender orders it (you pay for it, typically $500–$800) to confirm the home is worth at least the purchase price before lending against it.

The appraiser visits the property, measures it, documents its condition, and selects recent comparable sales ("comps") to determine value. Results are typically available within 5–10 business days.

Three outcomes:

• Appraises at or above purchase price: Process continues normally.
• Appraises below purchase price: You'll need to renegotiate the price with the seller, make up the gap in cash, or cancel if you have an appraisal contingency.
• Appraisal waiver: Some loans qualify for an automated valuation — no physical appraisal required. The lender will let you know if this is available.

5. Underwriting

Underwriting is the lender's formal review and risk assessment of your loan file. The underwriter is the person who ultimately approves or denies the loan. They evaluate three things:

• Capacity — Can you afford the payment? (Income, employment stability, DTI ratio)
• Credit — Will you pay it back? (Credit history, score, patterns)
• Collateral — Is the property worth the loan? (Appraisal, property type, condition)

Underwriting typically takes 3–10 business days. More complex files (self-employed borrowers, multiple properties, unusual income sources) take longer.

6. Conditions and PTD

Underwriters rarely issue a clean approval on the first pass. More commonly, they issue a conditional approval — the loan is approved subject to satisfying a list of conditions.

Common conditions:

• Letter of explanation for a credit inquiry, gap in employment or large deposit
• Additional bank statements showing the source of down payment funds
• Updated pay stubs or proof of continued employment
• Homeowner's insurance binder
• HOA documents or budget (for condos)

Once all conditions are satisfied, the file receives PTD — Prior to Document approval. This means the underwriter has signed off and the loan is ready for the closing documents to be prepared. A final "clear to close" follows after one last review.

7. Clear to close

Clear to close (CTC) is the final sign-off from underwriting. All conditions are satisfied, the appraisal is approved and the loan is ready to fund. This is the point where you schedule your closing date with the title company or escrow agent.

The lender will also verify your employment one final time (often the day before or morning of closing) to confirm nothing has changed since application.

8. Closing Disclosure

At least three business days before closing, you must receive the Closing Disclosure (CD) — the final version of the Loan Estimate. It shows your exact loan terms, final closing costs and the amount you need to bring to closing.

Compare the CD line-by-line to your original LE. Key things to check:

• Interest rate and loan amount should match (or be better than) the LE
• Section A fees cannot have increased at all
• Section B/C fees can change if you chose your own providers
• Cash to close — confirm this matches what you've been preparing

If you receive a revised CD with material changes, the three-day waiting period restarts. Don't schedule a same-day closing if the CD has just been issued.

9. Closing day

Closing takes place at the title company, escrow company or attorney's office (varies by state). Allow 1–2 hours. You'll sign the promissory note, deed of trust, Closing Disclosure and a stack of federal disclosures.

Bring valid photo ID and certified funds (cashier's check or confirmed wire) for the exact amount shown on the CD. Personal checks are not accepted for closing funds.

For purchase transactions, after signing and funding, the title company records the deed with the county and releases the keys. For refinances, there's a mandatory 3-business-day right-of-rescission period before funds are disbursed — you can cancel within that window without penalty.