Mortgages Made Simple.
A Step-by-Step Guide
Read This Guide Before You Fall in Love With a House.
📑Table of Contents
Receive weekly insights into how mortgages work by subscribing to our newsletter
SubscribeStep 0: Get Pre-Qualified (Optional)
Get a quick estimate from a lender based on self-reported info (no document uploads or credit pull). It's perfect for early-stage window shoppers who want a rough idea of their budget. Just keep in mind that sellers don't take this seriously.
Step 1: Get Pre-Approved
A pre-approval is a letter from a lender that says, "Based on your income, credit score, and debt, here's how much we'd be willing to lend you." It usually involves a soft credit check, which doesn't impact your credit score.
Knowing your budget is great but the real power of a pre-approval is in what it signals to everyone involved:
💡 Insider Tip:
A pre-approval doesn't lock you into one lender. You can, and should, shop around for better rates before you commit. Most lenders won't mention that. Instead, they'll lean on convenience ("We already have your info" , "It'll slow things down", or "We've got the best rates"). But comparing offers across lenders could save you thousands.
Bonus: Underwritten Pre-Approval (Gold Standard)
This is the strongest form of pre-approval you can get and it's a game changer in competitive markets.
Unlike a standard pre-approval (which is usually based on automated checks), an underwritten pre-approval means a human underwriter has already reviewed your full application: income, assets, credit, and employment documents.
However, there's a bit more upfront work involved. You'll need to upload documents like pay stubs, W-2s, bank statements, and authorize a hard credit check, which will ding your credit score a bit. Why it stands out:
💡 Insider Tip:
In hot markets, an underwritten pre-approval can help your offer stand out. 86% of home sellers prefer buyers who are fully pre-approved.
⚠️ Important Warning
Many lenders make it feel impossible to shop around. They demand 20+ documents just to talk. They hate being shopped. They ghost, stall, or worse: bait and switch. Some only show you the interest rate, not the full APR. Others sneak in last-minute fees, hoping you're too busy to notice.
✅ Approval AI
We catch those tricks early. If a lender plays games, they're out of our network. We don't mess with shady.
Step 2: House Hunting
You're pre-approved, which means you can now filter homes by what you can actually afford. Time to scroll listings, hit open houses, and imagine life with double bathroom sinks.
But here's the key: your pre-approval is a ceiling, not a target. Just because a lender says you can borrow $1.2M doesn't mean you should. short time frame count as just one for your credit score.
💡 Insider Tip:
Property taxes, insurance, and HOA fees can sneak up and blow up your monthly payment or even disqualify your loan even if the home prices seems "in budget." Lenders qualify you based on your DTI (monthly debt-to-income).
✅ Approval AI
Your Debt-to-Income ratio determines how much you can actually borrow. Lenders typically cap this around 43% of your gross income. Approval AI calculates your DTI in real time, so you don't get blindsided later.
Step 3: Make an Offer
Found the one? Time to put in an offer. Your real estate agent will guide you through this part, but your pre-approval letter plays a starring role.
You'll also decide if your offer includes contingencies like financing or appraisal that give you a way out if something goes sideways.
Your agent submits an offer, ideally with a strong pre-approval or underwritten letter. Once your offer is accepted, the real mortgage work begins.
Step 4: Complete Your Mortgage Application
Once your offer is accepted, it's time to submit your full loan application. If you already got an underwritten pre-approval, you're ahead of the game. In this step, you will:
But here's what they won't tell you:
- •Many lender quotes are padded with discount points.
- •Some only show you the interest rate, not the full APR.
- •Others sneak in last-minute fees, hoping you're too busy to notice.
- •And some even have APR requirements you can't meet, then make it a nightmare to back out.
Approval AI sees through the games. We shop aggressively, decode quotes, negotiate fees, and protect you from lenders who play dirty. 🕵️♂️
Step 5: Shop Your Mortgage Like a Pro
This is the most important step and the one most buyers skip. Don't be that buyer. Now that your full mortgage packet is ready, it's time to request real quotes from multiple lenders. Think of it like getting bids from contractors.
🛡️ Will Shopping Around Hurt My Credit? Nope. Despite what some lenders might say, FICO counts multiple mortgage inquiries made within a 45-day window as a single hit to your credit score. So get those quotes.
💡 Insider Tip
Rates change daily. To compare accurately, get all quotes on the same day, so you're comparing apples to apples. Spreading it over days = useless comparisons.
⚠️ Warning Tip
Watch out for bait-and-switch moves:
✅ Approval AI
Your AI assistant sends your info to top lenders simultaneously, compares real-time offers, and flags the best combo of rate, cost, and speed. If lenders pull any bait and switch moves, your AI assistant will Flags these in real time. If they cross the line, they're out.
Step 6: Underwriting
Once you've picked a lender and locked a rate, your loan enters underwriting. This is where the lender's team double-checks everything to make sure you're good for the money. This is basically their way of asking: "Are you really who you say you are, and can you actually repay this loan?"
During underwriting, lenders will:
💡 Insider Tip
Underwriting is where deals get delayed or derailed. Don't open new credit cards, buy a car, or switch jobs as they can blow things up. Stay steady and boring.
✅ Approval AI
Monitors your loan file and sends real-time alerts when lenders need something, so you're never caught off guard.
Step 7: Closing Day
You'll get a Closing Disclosure (CD) at least 3 business days before signing. It outlines your final interest rate, monthly payment, closing costs, and the total amount due at signing. Closing day is when you:
💡 Insider Tip
Review your CD carefully. This is your last chance to flag mismatches or surprise fees. If something looks off, ask.
✅ Approval AI
We review your Closing Disclosure to make sure everything matches the quote you accepted. No surprise fees, no last-minute changes. If something's off, we'll flag it before you ever pick up a pen.
Step 8: Celebrate
You did it. You've officially made it through the mortgage maze and into your new home. 🥳
Buying a home is one of the biggest financial decisions of your life but it doesn't have to be overwhelming. With the right tools (and a little help from AI), Approval AI helps you focus on what really matters: finding the place you'll call home. 🏡