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The Mortgage Process

Learn how the home loan process works and take the mystery out of buying a home

If you've never bought a home, you may have heard friends or family joke about how signing all the papers is enough to make your arm go numb. If you have bought a home, you know this joy first-hand. Of course, signing all those documents on closing day is the end of a long mortgage process. Learn where all of those documents come from during the home loan process so you're prepared.

1. Get pre-approved for a mortgage loan

You can start the mortgage approval process as soon as you decide to buy a home. Talk to your bank or lender and get a mortgage pre-approval letter, which stipulates how much you can spend on a house. This will help focus your search on homes you can comfortably afford.

2. Make a written offer on the house

After you decide on your dream house, the next step is making a formal, written offer. This offer is called a purchase agreement. Once the sellers accept it, it's legally binding, so be sure you're prepared to move forward. The purchase agreement includes the sale price, closing date and contingencies like a successful home inspection, approved financing and an attorney review. You'll also have to include a check for earnest money, which may be a flat $1,000 or up to 5% of the purchase price. This money is applied to closing costs when you close or returned if the deal falls through.

3. Start the mortgage approval process

With an accepted purchase agreement in hand, it's time to apply for your mortgage and really get the home loan process underway. You can do this by stopping into a Citizens Bank branch, calling 1-888-514-2300 or starting a mortgage application online.

When you apply for a mortgage, you'll need the following:

  • Documents that verify your income and your employment, such as a paystub from the last 30 days, W2's, and social security or disability award letters. If you are self-employed, please provide tax returns from the last two years and a YTD profit/loss statement for the current year.
  • Documents that verify you will have the necessary funds to close the loan as well as sufficient reserves after closing. Proof may be supplied as bank and investment account statements or gift letters.
  • Documents for obligations or payments that may not show up on your credit report when applicable. (e.g divorce decree or 12 months of cancelled checks for rent payment or child support)
  • A Purchase Agreement if you’re buying a home
  • Proof of homeowners insurance if you’re refinancing a home

Shortly after you submit this paperwork, you'll get a Good Faith Estimate, which is an estimate of the closing costs. You'll also receive a Truth-in-Lending Statement, which summarizes your loan terms, interest rate and finance charges so you can see the true total cost of your loan.

Finally, decide when to lock in the interest rate on your mortgage. Rates can change daily, so it's important to watch trends. If it looks like rates will drop, you may want to wait. If rates are rising, lock it in as soon as you can. Typically, you can lock in a rate anytime in the mortgage process between the submission of your application and five days before closing.

4. Processing of your mortgage

There are several players in the mortgage process. A loan processor gathers all necessary documents and then an underwriter decides whether to approve the loan. A title company will check the title of the house to make sure it's free of liens from previous owners. You'll also have to schedule visits by home appraisers and inspectors to assess the home and make sure it's accurately valued and in good condition. You will also need to provide a binder from the insurance agency of your choice, showing that you will have homeowners insurance activated once you close on your mortgage.

5. Close on your new mortgage

The day before closing, you'll receive a HUD-1 Settlement Statement which lists the actual amount of money you'll need at closing. This is more final and concrete than the Good Faith Estimate you got when you applied. On closing day, you'll have plenty of documents to review and sign. You may also set up an escrow account to combine your loan payment, taxes and home owners insurance all in one. After you sign the required paperwork and hand over a cashier's check for the closing costs, the lender transfers funds to the seller, and you're officially the owner! Your first mortgage statement should arrive in the first few weeks after you move in. Look for this document as it tells you where to send payments. You may also decide to sign up for automatic payment deductions from your bank account.

Start the mortgage process with Citizens Bank

Work with a home loan advisor who understands your situation and goals to find the best mortgage product for your situation. To start your mortgage application, call 1-888-514-2300 or fill out a mortgage application online.



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Citizens Bank is a brand name of Citizens Bank, N.A. (NMLS ID# 433960) and Citizens Bank of Pennsylvania (NMLS ID# 522615).