The Mortgage Loan Process in 10 Steps

Understanding the mortgage loan process is key to a successful buying experience. Before you make an offer on a home, follow these steps for a smooth path to homeownership.

Step 1

Do Some Research

• Annual Percentage Rate (APR): The interest you pay over the term of the loan (including origination fees and certain closing costs).
• Debt to Income Ratio (DTI): The percentage of your gross monthly income that goes toward debts owed.
• Private Mortgage Insurance (PMI): Protection for the lender if you stop making payments or default on your loan.
• Discount Points: Also called mortgage points, these are optional fees you can pay to lower your interest rate; 1 discount point equals 1% of the loan amount.
• Rate Lock: It protects your rate from increasing before you close.

Step 2

Create a Budget

Calculate how much you can afford—including down payment, closing costs and monthly payments. Once you understand what these costs are, you can pinpoint how much you can spend on a home.

Step 3

Check Your Credit

Your credit rating will be a factor in determining the terms of your loan, like the length and rate. Review your credit report before you apply, so you can address any issues or errors that may affect your application. Checking your credit won’t impact your score, and you're entitled to 1 free copy of your credit report every 12 months.

Step 4

Find a Real Estate Agent

Your real estate agent will provide valuable insight into the housing market. They'll also help you make a strong offer on a home and navigate the rest of the process. Need help finding a real estate agent? RealtyPlus® is a free service Navy Federal members can use to select an experienced, top-performing local real estate agent. Footnote 1

Step 5

Get Preapproved

A preapproval letter shows sellers you're a serious buyer and gives you a competitive advantage when you decide to make an offer on a home. Visit HomeSquad to request your preapproval letter from Navy Federal. Tip: Selecting electronic delivery allows you to receive and sign your documents digitally, helping move your loan along faster. This way, you aren’t waiting on your documents to arrive in the mail.

Step 6

Gather Key Documents and Information

• Date of birth
• Social Security Number
• Navy Federal Share Savings account number
• 2-year address history
• 2-year work history
• Gross monthly income to be used for qualifying for a mortgage
• Any other income to be considered for qualifying
• Deposit account and asset information held by financial institutions other than Navy Federal Credit Union to be considered for qualifying
• Current tax, homeowners/condo dues, insurance and lien information

If you’re self-employed, you’ll also need to provide:

• W-2 forms and personal tax returns from last 2 years
• Pay stubs from last 2 months
• List of monthly expenses (bills you pay each month)
• 2 months of bank, retirement and investment accounts statements

Step 7

Find a Home

Now comes the fun part—finding your perfect new home! Once you find the one, upload the signed purchase agreement to HomeSquad, so we know you’re ready to move forward. Your request for preapproval will then convert to a mortgage application, and you’ll receive a loan estimate within 3 business days. If you review and decide to proceed, you’ll need to provide Intent to Proceed to your loan officer by phone, by email or through the document portal in HomeSquad.

Step 8

Upload Documents for Processing

Routinely check your HomeSquad dashboard for tasks. It will have a list of the documents we'll need to verify your application. We may ask for additional information, like a copy of your most recent pay stub, so check back often and try to respond quickly to keep your loan on track for closing. After we receive all the documents, your application will move to processing to validate everything. At this point, we’ll also order the appraisal. This is an up-front fee, so make sure you’re prepared. You’ll need to schedule a property inspection, choose your title company and provide proof of homeowner’s insurance. You might also need an escrow account. After a complete review, your application will move to underwriting for final approval.

Step 9

Get Final Approval and Prepare for Closing

• traditional in-person closing, where you’ll sign all the documents with the settlement agent
• Hybrid eClosing, where you’ll sign most of your documents electronically and the ones requiring notarization at the in-person appointment
• Remote Online Notary (RON) eClosing, where you’ll sign most of your documents electronically and the ones requiring notarization at an online appointment with a virtual notary

Just remember to let your loan processor know your preference at least 3 days before your closing, so we can provide the best experience possible.

Before closing day arrives:

• Review your Closing Disclosure. You’ll receive your Closing Disclosure at least 3 business days before your closing appointment, giving you time to check for errors as it includes your interest rate, loan type, loan term, monthly payments and closing costs. Make sure to acknowledge receipt of the Closing Disclosure by calling or emailing your loan officer as soon as you receive it.
• Decide how you want to pay your closing costs—either with a wire transfer or cashier’s check. If you have any questions, your loan officer can help.
• Set up a final walk-through of your home with your real estate agent. Make sure you feel comfortable with it before you sign any paperwork.

Step 10

Close on Your New Home

Congratulations—you have a home sweet home! On closing day, no matter if you chose a traditional in-person closing, a Hybrid eClosing or a RON eClosing, you’ll sign your final set of documents to complete the process. Make sure to review the information carefully before signing. Now it’s time to get your keys and start planning your move.