After a long search, you’ve finally found the perfect home for you! However, before you can officially call yourself a homeowner, you’ll have to go through a few steps to finance your home. When you apply for financing, your lender will evaluate your credit and financial background to determine your eligibility in what is known as the mortgage underwriting process. The underwriting process can take around a week from conception to completion, and it’s typically broken down into the following steps.

Step 1: Apply

The first step of the process is to fill out and submit a loan application. Depending on the situation, you will likely have to provide the following documents with your application:

  • Photo ID
  • Tax returns
  • Paystubs, W-2s or other proof of income
  • Bank statements and additional assets
  • Credit history
  • Gift letters
  • Renting history

Step 2: Review

After submitting your application, a loan processor will organize the submitted documents for an underwriter. A mortgage underwriter determines your eligibility for the loan and accepts or denies your application by evaluating the risk the lender will assume. The underwriter assesses a variety of factors, including the following:

  • Credit: The prediction of your likelihood of repayment based on the analysis of past credit repayment.
  • Capacity: The comparison of a borrower’s income to their debt.
  • Collateral: The security of your loan in the case any issue preventing repayment arises.
  • Cashflow: A review of your finances after you close.

Step 3: Appraise

A property valuation is needed to confirm the home’s value aligns with the purchase price. Getting an appraisal protects both the buyer and lender by ensuring you only pay what the home is worth, and that the property is in a safe and habitable condition.

Step 4: Search

Along with the appraisal, your lender will also order a title search. This ensures there are no liens, claims, unpaid taxes, judgments, or unpaid HOA dues on the property. Once complete, you can purchase an insurance policy with a title insurer to guarantee the accuracy of the search.

Step 5: Decision

Finally, the underwriter will either deny, suspend, or approve your mortgage loan application.

Once your application is approved, you can begin working with your lender on moving forward with the closing process.

However, if your loan application is denied, it’s important to ask your lender for more details so you can work to improve your chances should you choose to reapply. Some common reasons for denial include a low credit score and unstable employment. If, for any reason, the underwriter cannot determine eligibility due to a lack of materials, they may choose to suspend your application.


If you’re ready to start your homebuying journey and want to learn more about your financing options, the team of professionals at Coastal Custom Mortgage is here to help! From application to closing, we can walk you through the steps to homeownership. Contact us today to get started.