What Happens When You Get a Mortgage
A mortgage is a loan from a bank or lender that lets you buy a house now and pay for it over 15 to 30 years. The house itself is collateral — if you stop paying, the lender can take it back. The process has five main stages: getting pre-approved (which shows sellers you are serious), finding a house, making an offer, getting a full appraisal and underwriting, and closing. Most people spend two to four months from pre-approval to closing, though it can be faster or slower depending on the market and how quickly you move.
The lender will charge you interest on the loan — the percentage varies based on your credit score, the size of the loan, current market rates, and how long you borrow for. You will also pay property taxes, homeowners insurance, and possibly mortgage insurance if you put down less than 20 percent. These costs are separate from the loan itself and are usually rolled into your monthly payment.
Key Takeaways
- Pre-approval from a lender shows you how much you can borrow and takes one to three days; it is not a may provide but it is required before making an offer.
- Your credit score, income, debt, and down payment size determine whether a lender will approve you and what interest rate you will pay.
- The appraisal and underwriting phase — where the lender verifies everything about you and the house — usually takes two to four weeks and is where most loans get delayed or denied.
- Closing is the final signing and funding; you will review documents, pay closing costs, and receive the keys, usually at a title company or attorney's office.
Getting Pre-Approved and Understanding What You Can Afford
Pre-approval is the first real step. You contact a bank, credit union, or mortgage broker and provide basic information: your income, employment history, credit score, existing debts, and how much you want to put down. The lender pulls your credit report and does a quick financial review. Within one to three days, they tell you the maximum loan amount you may have access to for and at what interest rate.
This pre-approval letter is not a promise to lend — it is conditional on the house, the appraisal, and verification of everything you told them. But it is what you show to a real estate agent and to sellers when you make an offer. Without it, sellers will not take you seriously.
Use the pre-approval number to figure out your actual budget. A lender might say you can borrow $400,000, but that does not mean you should. Add up your down payment, closing costs (usually 2 to 5 percent of the loan), and monthly expenses like property taxes and insurance. Many people find they can afford less than the maximum the lender offers.
Finding a House and Making an Offer
Once you have pre-approval, you work with a real estate agent to find houses in your price range. When you find one you want, you make an offer — a written contract saying what you will pay, when you want to close, and any conditions (like the appraisal coming in at that price, or the inspection finding no major problems).
The seller can accept, reject, or counter your offer. If they accept, you move into the next phase. If they counter, you negotiate back and forth until you reach a number both sides agree on. Once the offer is accepted, you are in contract and the clock starts on the appraisal and underwriting process.
At this point you also order a home inspection (separate from the appraisal) to check for structural problems, plumbing issues, roof condition, and other defects. This usually costs $300 to $500 and takes a few hours. If the inspection finds serious problems, you can renegotiate the price or walk away, depending on what your contract says.
The Appraisal and Underwriting Phase
After your offer is accepted, the lender orders an appraisal — a professional assessment of what the house is actually worth. An appraiser visits the property, measures it, compares it to similar houses that sold recently, and writes a report. This usually takes one to two weeks. If the appraisal comes in lower than your offer price, the lender will only loan you the appraised value, and you have to make up the difference in cash or renegotiate with the seller.
At the same time, the lender's underwriting team verifies everything: your income (they request recent pay stubs and tax returns), your employment (they may call your employer), your debts (they pull your full credit report), your bank accounts (they want to see proof you have the down payment and closing costs), and the title to the house (they order a title search to make sure the seller actually owns it and there are no liens). This phase usually takes two to four weeks but can stretch longer if the underwriter asks for more documents or if there are problems.
Common reasons underwriting gets delayed: a gap in employment, a recent large deposit that looks suspicious, a lien on the property, a low appraisal, or missing documents. If the underwriter asks for something, provide it as quickly as possible — delays here directly delay your closing date.
Getting a Clear-to-Close and Preparing for Closing
Once underwriting is complete and everything checks out, the lender issues a clear-to-close — a document saying they are ready to fund the loan. This usually happens a few days before your closing date. At this point, the lender sends you a Closing Disclosure, a detailed summary of the loan terms, interest rate, monthly payment, and all closing costs. You are required to receive this at least three business days before closing so you can review it.
A few days before closing, do a final walk-through of the house to confirm the seller has made any agreed-upon repairs and that nothing has changed. Bring your pre-approval letter, ID, and proof of homeowners insurance (the lender requires this before they will fund).
Closing costs typically range from 2 to 5 percent of the loan amount and include the appraisal fee, title search, title insurance, attorney fees (in some states), recording fees, and the lender's origination fee. Some of these costs can be negotiated or paid by the seller as part of the offer, but you need to know the total before closing day.
The Closing Meeting and Funding
Closing happens at a title company, attorney's office, or lender's office. You will sit down with a closing agent who walks you through a stack of documents. The main ones are the promissory note (your promise to repay the loan), the mortgage or deed of trust (the lender's claim on the house if you do not pay), and the Closing Disclosure (the final summary of terms and costs).
You sign these documents, provide a cashier's check or wire transfer for your down payment and closing costs, and review the final numbers. The closing agent then records the deed and mortgage with the county, and the lender funds the loan — sends the money to the seller's account. Once the money clears, you get the keys and own the house.
The whole closing meeting usually takes one to two hours. After closing, you own the house and your monthly mortgage payment begins, usually 30 days after closing.
Types of Mortgages and How Interest Rates Work
A fixed-rate mortgage has the same interest rate and monthly payment for the entire loan term — 15, 20, or 30 years are most common. A 30-year loan has a lower monthly payment but you pay more interest overall. A 15-year loan has a higher monthly payment but you pay off the house faster and pay less total interest.
An adjustable-rate mortgage (ARM) has a lower interest rate for the first few years (usually 3, 5, 7, or 10 years), then the rate adjusts annually based on market conditions. Your payment can go up significantly after the fixed period ends. ARMs are riskier because your payment is not predictable long-term, but they can save money if you plan to sell or refinance before the rate adjusts.
Your interest rate depends on your credit score, the loan amount, the down payment size, the loan term, and current market rates. A higher credit score gets you a lower rate. A larger down payment also lowers your rate because the lender has less risk. Current market rates change daily and are set by the Federal Reserve and bond markets — you cannot control them, but you can lock in a rate when you get pre-approved so it does not change before closing.
Frequently Asked Questions
What credit score do I need to get a mortgage?
Most lenders require a credit score of at least 620, but 740 or higher gets you better interest rates. If your score is below 620, you may still find lenders, but you will pay a higher rate and may need a larger down payment. Check your credit report for errors before explore — you can get a free report at annualcreditreport.com.
How much down payment do I need?
Down payments range from 3 to 20 percent of the purchase price. A 20 percent down payment avoids mortgage insurance, but 3 to 5 percent is common for first-time buyers. If you put down less than 20 percent, you pay mortgage insurance (PMI), which adds to your monthly payment until you have paid down the loan enough to reach 20 percent equity.
What if the appraisal comes in lower than my offer?
The lender will only loan you the appraised value, not the offer price. You can pay the difference in cash, renegotiate the price with the seller, or walk away if your contract allows it. This is why having a home inspection and appraisal contingency in your offer is important.
How long does the whole process take?
From pre-approval to closing usually takes 30 to 60 days, depending on how quickly you find a house, how fast underwriting moves, and whether any problems come up. Appraisal and underwriting are the longest phases. If the underwriter asks for more documents, it can stretch to 90 days or longer.
Can I get a mortgage if I am self-employed?
Yes, but it is more complicated. Lenders typically want two years of tax returns and may ask for profit-and-loss statements or business bank statements. Self-employed borrowers often need a higher credit score and larger down payment because income is less predictable. Talk to a mortgage broker who works with self-employed borrowers — they know which lenders are easiest to work with.