Solving the Mystery of the Mortgage Loan Process

Metropolitan Mortgage Corporation understands that applying for a home mortgage can be an overwhelming prospect. That’s why our team is here to support you from when you start thinking about buying a home to getting your keys in hand. As mortgage bankers, we understand the loan process and are here to walk you through the eight steps of getting your loan.

1. Determine your budget 

The primary consideration of a mortgage loan is this: how much can you afford? Lenders have a wide range of what they consider “affordable”; your job is to figure out a payment level that’s comfortable for you.

These are the basics for coming up with a housing budget.

• How much of a down payment can you make?
• The mortgage payment only includes the principal and interest payments. Estimated real estate taxes and homeowners insurance premiums are in addition to that number. The total monthly payment is the PITI (Principal, Interest, Taxes, Insurance).
• Can you put down enough to avoid paying a mortgage insurance premium?
• Don’t forget HOA dues and potential assessments.
• Houses are expensive to maintain. Be sure you keep enough in savings for repairs.

Once you have these numbers, you can determine how much house you can afford. Remember that just because a lender is willing to max out your mortgage loan doesn’t mean it’s a good idea.

2. Get pre-approved

Once you’ve determined a realistic budget and searched for homes online, it’s time to get pre-approved for your mortgage. At Metropolitan Mortgage, we will review your overall financial picture and issue you a pre-approval letter you can take to your realtor. A pre-approval letter is more important than a pre-prequalification letter because we are telling the seller that you meet our standards for a loan, and the only thing left to do is find a suitable house. This tool sets you apart from other buyers in today’s competitive Kansas City market.

3. Find a home and sign the contract

Now that you and your real estate agent are touring homes in person, you’re ready to find the right house and make an offer. The amount you’ll offer for the home is just the beginning of the offer process; your agent will structure the offer so that it’s appealing to the seller. They could suggest a larger down payment as a signal you are serious or present a contract with few contingencies—again, telling the seller that you want the home and are not going to nitpick the details.

The contract is effectively a road map to closing. During the mortgage loan process, you can check off the conditions of the approval, each one getting you that much closer to your new house keys.

4. Home Inspector

A home inspection is ordered by your realtor as soon as both parties sign the contract. Your real estate agent can place the order for the home inspection on your behalf, or you can do it yourself. This inspection is entirely separate from the appraisal, which assesses value. The inspector comes with their flashlight and coveralls and goes over every inch of the house. From crawlspace to attic, and may even get up on the roof. They’ll run the dishwasher and the HVAC to ensure they work properly, test the electrical system and validate it’s up to code, and check the plumbing and pipes, the foundation, and anything else in the house. The inspection can cost about $400 but can be more or less and depends on the age and size of the house. You can ask for repairs or financial concessions based on the inspection results.

5. Finalize the mortgage application

You want to start the mortgage loan application once the seller accepts your offer and you deliver your earnest money deposit. You’ll also need to provide updated pay stubs and bank statements if your pre-approval is over a month old. These items are required before we can start the mortgage loan process. You’ll receive a Loan Estimate within three days of your completed application, which covers the costs you will incur in obtaining the loan. These costs are itemized and include:

• Filing fees.
• Processing and origination fees.
• Attorney and title search fees.
• Title insurance premiums.
• All the other expenses associated with the loan.

6. Lender orders the appraisal

Lenders require an appraisal to confirm the home’s value is at least equal to the purchase price. The lender orders the appraisal, and the appraiser is randomly selected from the lender’s approved vendor pool. The appraisal costs $495-$550, and you’ll pay that upfront.

7. Mortgage processing and underwriting

The actual mortgage processing is “hurry up and wait” for buyers. The processor makes sure all the required documents are in the file. They order the title search, confirm your homeowner’s policy, and send the file to the underwriter. The underwriter reviews the documents in the file and signs off on each condition of the approval. They may request additional explanations of collections or judgments in your credit file. If our mortgage bankers see any “red flag” on your credit report, we’ll ask for that explanation so it can go in the file before the underwriter gets it. Once the appraisal is in and the title search has been reviewed. Then the file is considered “clear to close,” and the loan documents are prepared and sent to the closing agent.

8. Settlement

Your Metropolitan Mortgage banker will provide you with a Closing Disclosure at least three days before settlement. You can either e-sign or wet sign this document and date it at least three days before closing. This is the final fee tally and should closely reflect the original Loan Estimate. The only things that should be markedly different are real estate taxes or buyer concessions. This document also lets you know how much money you will need at settlement, which includes the closing costs and the remainder of the down payment.

Plan to wire the funds to the closing agent’s escrow account rather than bringing a certified check.

The settlement itself involves signing a lot of papers. Typically, the seller will not be there; their only role is signing the deed, and they can do that ahead of time. Once the new deed is recorded at the courthouse, the loan is considered “closed,” and you are officially a new homeowner.

This article has provided a quick rundown of the loan process. At Metropolitan Mortgage, our expertise is in the Kansas City area, and our team is ready to give you the best mortgage experience in the market today. Contact to learn more about our hands-on, local service.