Six steps to buying your home, from finding a lender to closing

For most homebuyers, a mortgage is essential. However, the mortgage loan procedures can be overwhelming. Here's a step-by-step guide to getting a mortgage, from preapproval to closing.

1. Find a lender.

Your homebuying journey shouldn't start with looking for a house. It should start with finding a lender. Mortgages are long-term relationships, and you'll want to be confident that your mortgage provider offers a strong combination of quality service and competitive pricing.

Consider the reputation and strength of the company. Also, pay attention to closing costs and fees in addition to interest rates. They can contribute to a higher overall loan cost. Familiarize yourself early about what costs could be applied to your loan. Some typical costs and fees are detailed later in this article.

2. Get preapproved.

Getting a preapproval could help you save time later. Plus, you'll be in a stronger position to make a credible offer to a seller. Check with your lender to see if they offer preapprovals.

A preapproval gives you an idea of the amount you may be able to borrow for a home loan. To determine how much you qualify for, the lender may look at your credit score, income and debts. A mortgage preapproval can temporarily affect your credit, but it helps your lender evaluate your ability to afford a mortgage payment, including property taxes and insurance. This step may also help identify any potential problems with your credit, so you can start fixing them.

If you're preapproved, you'll receive a letter from your lender. This can be important to a seller, who will evaluate your offer price, and whether you have financing in place. If you're working with a realtor, they should be able to help you in making an offer.

3. Make an offer.

Once you've found a property you like and can afford, make an offer. Be sure to research selling prices of comparable homes in the area, so you understand the seller's asking price.

Your real estate agent can prepare a comparative market analysis to figure out a fair offer. Their experience also comes in handy during the negotiation process.

If the seller accepts your offer, a purchase contract will be created. This formalizes both parties' intention to go through with the deal. Send a copy to your lender, who can guide you through the loan application process.

4. Submit underwriting documents.

To be approved for a mortgage loan the lender will formally evaluate your information through the underwriting process. The goal is to assess your ability to repay the money you borrow. This means reviewing your credit report, income, assets, and past and current debts. It can take a few days to several weeks depending on when your lender receives all your information.

During this phase, the lender will require you to send documents. To speed up the process and enhance the security of your personal information many lenders support uploading your documents through their website or mobile app. Lenders may also allow you to grant permission for them to electronically retrieve your information directly from your financial institution or employer. What you're asked for can vary based on the type of loan you're applying for and your lender's underwriting requirements. These documents may include things like:

• Pay stubs for the past 30 days.
• W-2 forms for the past two years.
• Details about long-term debts, such as auto and student loans.
• Recent statements from all your bank accounts.
• The previous year's tax return or the past two years if you're self-employed.
• Proof of any other income you receive.
• Proof of homeowners insurance.

There may be situations where the lender needs more information after their first review of your documents. To keep things moving, be ready to respond to these requests quickly, as they're required for you to get a final loan decision. These items may include:

• More documentation to prove your income.
• Documents specific to certain situations, such as a divorce decree, letters of explanation or childcare expense records.
• Documentation on the source of your down payment.

The lender will also order an appraisal of the property. This ensures the sale price of the home is close to its true value. The lender will also request a search of the title to the property. They do this to ensure there aren't any issues with the title that may affect your purchase.

5. Do a final walk-through.

Within 24 hours of closing, arrange a final walk-through of the home you're buying. The property should be empty by then, unless you have an agreement with the seller. Typically, it's just you and your agent who attend the walk-through to make sure there's no damage or other changes in the home's condition. This includes the removal of fixtures or other items you understood were part of the sale price.

If issues arise, your agent should remedy the situation with the seller and decide if it'll affect your closing. If the problems will affect your closing date, be sure to notify your lender.

6. Close on your home.

Closing is the final step in the mortgage and homebuying journey. It's a paperwork-intensive meeting that completes the legal transfer of the home from the seller to you. It also finalizes your mortgage documents if you're financing the purchase. It often happens at the office of a nearby title company, escrow agent or attorney. If you're buying the home with your spouse or someone else, both of you or an approved power of attorney will need to attend.

Understand your closing costs.

At closing, you must pay closing costs and a down payment. You can do this with a certified check or wire transfer. Be sure to confirm the final amount with your lender or title company before requesting funds from your bank.

Closing costs can vary, depending on the type of loan you choose, location and property type. They typically range from 2% to 5% of the loan amount. So if you're approved for a $400,000 loan, you could pay anywhere from $8,000 to $20,000. Your closing costs also include some combination of these fees and payments:

• Application fee: Covers the cost for the lender to process your application.
• Appraisal fee: Paid to the appraisal company to confirm the fair market value of the home.
• Attorney fee: If there's an attorney to review the closing documents.
• Escrow fee: Paid to the title company, escrow company or attorney for conducting the closing.
• Escrow deposit: Money set aside to pay property taxes and mortgage insurance for two or more months depending on the time of year and first scheduled payment.
• Lender fees: Origination fee and discount points paid to the lender.
• Prepaid interest: Accrued between closing and the date of your first mortgage payment.
• Other fees: Credit report fees, required inspections, survey costs, title search, title insurance policy and other miscellaneous fees.

Be aware of changes to your mortgage after you close.

The USAA Advice Center provides general advice, tools and resources to guide your journey. Content may mention products, features or services that USAA Federal Savings Bank does not offer. The information contained is provided for informational purposes only and is not intended to represent any endorsement, expressed or implied, by USAA or any affiliates. All information provided is subject to change without notice.