Here are the steps which all borrowers go through to get a loan to buy or refinance a home:

1. Decide which lender you want to work with – your decision will probably be based on referrals from family/friends/your realtor, how informative and responsive the lender is, the interest rate, the closing costs, and how much you trust the person who is giving you a quote.   It’s important to decide which lender you want to work with  before you apply.  Once you feel comfortable with your choice, then it’s time to fill out some paperwork.
2. Apply to get pre-approved – Getting pre-approved means that an application has been filled out and you have provided the lender with your pay stubs, bank statements etc. to document what is on your application.  This is different from pre-qualification in which the lender simply asks you some questions and verbally tells you what you can afford.  Until the lender actually reviews your documentation and pulls your credit, you won’t be able to get a pre-approval letter or know with 100% confidence that you will qualify for the size loan you want.  An application can be made in three ways:
   1. applying online and faxing and emailing in your documentation
   2. having the loan officer take your application by phone and you faxing and emailing in your documentation
   3. applying in person.  The best  method will depend upon your preference, work schedule, etc.
3. Underwriting of your loan – The first step here is for your data to run through a computer program which determines the level of risk on your loan and your debt-to-income ratio.  This is the level of debt you will  have after the loan closes compared to your income.  Once you pass this first step, your loan goes to a live human being called an underwriter.  It is their job to determine whether you meet the criteria for the loan program and loan size you are applying for.  This entails the amount of money you have available, your credit, your debt, and your income.  There will always be conditions on a loan – such as the need for an appraisal.  But, your loan officer will (or should) make sure that all important issues which could result in you not getting the loan are resolved before you get really serious about looking for a home or spending money on an appraisal or home inspection.
4. Look for a home which meets your needs now and for the next few years – It’s far better to “stretch” yourself a little financially, if necessary, to find a home you will want to keep for a long time than to settle for a home you will wind up selling in just a year or two – thereby having to pay a lot of sales charges and moving expenses.  It is your “home” so you want to feel safe, want to enjoy going home and feel comfortable having other family and friends come over.
5. Make an offer and negotiate the sales price and any other terms. This is where an experienced and knowledgeable realtor is essential.  If you are not real experienced at buying homes, sometimes the realtor can protect you from making some real mistakes that you might have made on your own.  Your realtor will be instrumental in helping you structure your offer to meet your needs.  Maybe you want to negotiate a lower sales price.  Maybe you want the seller to pay for all or part of your closing costs.  The lender and the realtor will need to communicate about your capabilities and needs before your offer is made.
6. Have a home inspection. The purpose of a home inspection  is to determine the condition of the property.  A home inspector will thoroughly look at the condition and make a list of anything which he/she feels would need to be repaired.  In this way, you will have a good idea of whether you want to proceed as is, whether you want the seller to make some repairs, whether you want the seller to come down on the price, or whether you want to move on and find a different home to buy.
7. Have an appraisal. An appraisal is completed to determine whether the home is worth the sales price.  You certainly don’t want to pay more for a home than it is worth and the lender doesn’t want you to do that either – even if you were willing.  The appraiser finds other properties which are similar to the one you want to buy which have sold within the last six months and have a  similar size and features.
8. Pick out a homeowner’s insurance company. The buyer(s) get to choose any insurance company that they would like to work with.  This company will insure the property against fire, theft,  vandalism and sometimes floods and earthquakes.  If you are buying a condo, whether you will be required to buy homeowner’s insurance will depend upon the coverage which is already provided through the master insurance policy with the homeowner’s association.  As a buyer, all you need to do is to provide the lender with the name and phone number of whatever insurance company you want to work with.
9. Obtain a preliminary title report from the title company. This report will let you know which persons or companies may have any right to the property.  It will also state what the property taxes are and whether their are any judgments against either the buyer(s) or seller(s).
10. Have a final underwrite of the loan. This is where the underwriter will review over the loan again – only this time they have the appraisal, the preliminary title report and other documentation to look at.  The underwriter will then approve the loan and list “prior to loan document” conditions (ones which must be met before the loan papers can go out to the title company) and “prior to fund” conditions (ones which can come at the end but must happen before the loan closes.)
11. Sending in the loan papers (called loan docs) to the title company.  Any final issues are taken care of and the lender then draws up the legal contracts and will email them to the title company along with instructions to the title company of what needs to be completed before funding will occur.
12. Working up the numbers. The escrow officer will draw up what’s called an estimated closing statement, sometimes called a HUD1).  This document is then emailed to the loan officer for his/her review.  Once it is determined that it is accurate, then the escrow officer will call the buyer(s) and schedule a signing appointment and let him/her know how much money to bring in to the signing.
13. Getting the money. The buyer goes to their bank and gets a cashier’s check or has monies wired directly to the title company.  If monies are being wired, the buyer will need to get what’s called “wiring instructions” from the title company and give that information to the company where the funds are coming from.
14. The closing or signing appointment. The buyer(s) goes into the title company and sign papers.  A good loan officer will go over this process with the buyer(s) before he/she goes into the appointment.  Generally, the realtor and the loan officer attend this signing – assuming there are no scheduling conflicts.
15. Funding and recording of the loan. The loan papers go back to the lender and are reviewed to make sure everything is signed properly and all conditions are signed off of the loan.  If so, the lender will then schedule a wire transfer for the next day.  Monies equal to the loan amount are wired to the escrow and title company.  Then, the escrow officer and the “funder” balance the loan so that every penny is accounted for.  Once this happens, the lender will “release” the loan – which means that they give the title company permission to record the loan.  Once the loan is recorded at the county courthouse of the county where the property exists, THEN the ownership of the property transfers to the new buyer(s) and their homeowner’s insurance takes effect.  This is generally when the buyer gets the keys to their new home!