Getting Pre-Approved for a Mortgage
Before you tour a single home, securing a mortgage pre-approval is the most important step you can take. Pre-approval is a lender's written commitment to loan you up to a specified amount, based on a review of your credit score, income, debts, and assets. It is distinct from pre-qualification, which is a looser, self-reported estimate carrying far less weight with sellers.
A strong pre-approval letter does two things: it tells you what you can realistically afford, and it signals to sellers that you are a serious, financially vetted buyer. In competitive markets, some sellers will not even consider offers from buyers who lack one.
Shop at least two or three lenders before committing to a pre-approval — interest rates and fee structures vary, and even a small rate difference can mean thousands of dollars over a 30-year loan.
Comparing loan estimates from multiple lenders is one of the highest-leverage actions a buyer can take, yet many buyers approach only one lender for convenience.
Attend the home inspection in person and walk through the property with the inspector rather than simply waiting for the written report.
Being present lets you ask questions in real time and understand the severity of issues — context the written report alone cannot always convey.
Gather your two most recent pay stubs, W-2s, federal tax returns, and bank statements before you approach a lender. Having documentation ready accelerates the process and reduces the chance of a delayed approval once you are under contract.
Making an Offer
When you find a home you want to purchase, your buyer's agent will help you draft a purchase offer — a formal, legally binding contract proposal that specifies your offered price, proposed closing date, earnest money deposit, and any contingencies.
Contingencies are conditions that must be met for the sale to proceed. The most common are the financing contingency (the deal can fall through if your loan is denied), the inspection contingency (you can negotiate or walk away based on inspection findings), and the appraisal contingency (the sale is void if the home appraises below the purchase price). Waiving contingencies can make an offer more competitive, but doing so increases your financial risk significantly. See our guide on why buyers lose deals for a detailed breakdown of the trade-offs.
Understand Earnest Money Before You Deposit It
Earnest money — typically 1% to 3% of the purchase price — is deposited into escrow after acceptance. If you back out of the deal without a valid contingency, you may forfeit that deposit entirely. Understand when and how you can exit the contract before you sign.
Earnest money — typically 1% to 3% of the purchase price — is deposited into escrow after acceptance. If you back out of the deal without a valid contingency, you may forfeit that deposit entirely. Understand when and how you can exit the contract before you sign.
The Inspection and Appraisal Phase
Once your offer is accepted, a clock starts ticking. Most purchase contracts give you 7 to 14 days to complete a home inspection. A licensed inspector will evaluate the property's structure, roof, electrical system, plumbing, HVAC, and more — then deliver a detailed report. This is your primary opportunity to uncover issues that were not visible during showings.
After reviewing the report, you can request repairs, ask for a price reduction, or — if your contract includes an inspection contingency — walk away. For a deeper look at what buyers often miss during this window, see things first-time buyers wish they'd investigated before closing.
Separately, your lender will order an appraisal — a professional estimate of the home's market value. If the appraisal comes in below your agreed purchase price and you have an appraisal contingency, you can renegotiate with the seller or exit the contract. Without that contingency, you would need to cover the gap in cash or risk losing your deposit.
2%–5%
Typical closing costs as share of loan amount
The Consumer Financial Protection Bureau (CFPB) notes that buyers should budget 2% to 5% of the loan value for closing costs, separate from the down payment.
81%
Buyers who conduct a home inspection
According to the National Association of Realtors' Profile of Home Buyers and Sellers, the vast majority of buyers choose to have a home inspection performed.
Navigating the Closing Process
Closing — also called settlement — is the final legal transfer of property ownership from seller to buyer. In the days before closing, your lender will issue a Closing Disclosure, a document that itemizes every cost associated with your loan and the transaction. Federal law requires you receive this at least three business days before closing so you have time to review it.
Closing costs generally run between 2% and 5% of the loan amount and can include lender origination fees, title insurance, attorney fees (required in some states), prepaid property taxes, and homeowner's insurance. These costs are on top of your down payment, so arrive at the closing table prepared.
Read Every Document Before Signing
At closing, you will sign a significant stack of documents — the promissory note, deed of trust, and transfer paperwork. Review each document before signing. It is entirely appropriate to ask the closing agent to pause and explain any term you do not recognize. Once recorded, most of these agreements are legally binding and difficult to undo.
At closing, you will sign a significant stack of documents — the promissory note, deed of trust, and transfer paperwork. Review each document before signing. It is entirely appropriate to ask the closing agent to pause and explain any term you do not recognize.
What Happens After You Close
The moment you sign the final documents and the deed is recorded, ownership transfers to you. Your first mortgage payment is typically due on the first day of the second month after closing — so if you close in March, your first payment is due May 1. Confirm the exact date and payment address with your lender in writing.
Immediately update your homeowner's insurance to reflect your possession date, change the locks, and locate your home's main water shutoff and electrical panel. These are not optional tasks — they are baseline protections for your investment.
The terminology you will encounter as a new homeowner — from escrow accounts to amortization schedules — can be confusing at first. Our plain-language glossary of key homeowner terms covers the most common concepts you will face throughout your mortgage. For broader guidance on managing and maintaining your property, explore our Homeownership Tips hub.
This article is for general informational purposes only and does not constitute financial, legal, or real estate advice. Consult a licensed real estate professional and, where appropriate, a qualified attorney or financial adviser for guidance specific to your situation.
The content on this site is for informational purposes only and is not a substitute for professional advice. Always consult a qualified professional for guidance specific to your situation.