The Paperwork Behind the Purchase

What Buyers Should Expect From Preapproval to the Closing Table

Searching for homes is the fun part.

Touring houses. Imagining where the furniture will go. Finding the one. Writing the offer and waiting to hear that it's officially under contract.

But behind every successful home purchase is a lot of work happening that buyers don't always see—and much of it starts before you ever walk through the front door of a house.

From preapproval and financial documentation to due diligence, underwriting, appraisal, insurance, title work and final loan approval, there are a lot of moving pieces working together to get you from house hunting to homeowner.

And one of the easiest ways to make that process smoother?

Be prepared for the paperwork.

It Starts Before the Home Search

Before we start seriously looking at homes, one of the first stops is usually the lender.

A preapproval isn't just about asking, “How much house can I afford?” The lender needs to look at the financial picture behind that number.

That means documents.

Depending on your loan program, employment and financial situation, your lender may request things such as:

• Recent pay stubs

• W-2s

• Federal tax returns when required

• Recent checking and savings account statements

• Retirement or investment account statements if those funds will be used

• Driver's license or other identification

• Documentation for Social Security, retirement, commission, rental or other qualifying income

• Information regarding current debts and financial obligations

Self-employed buyers may need additional documentation, including business tax returns, profit-and-loss statements or other business records.

The exact list will vary from buyer to buyer, but the purpose is the same: the lender needs to verify the income, assets and financial information being used to qualify you for the mortgage.

This is also why getting preapproved before falling in love with a house matters.

It gives you time to work through documentation questions before you're under contract and working against deadlines.

You Found the House. Now the File Gets Bigger.

Once you have a signed purchase contract, the process moves into another stage.

Now the lender isn't just evaluating whether you qualify for a mortgage. They're working toward approving this particular loan on this particular property.

Your contract itself becomes part of the transaction file, along with information about deposits, financing and the property.

And yes—you may be asked for documents you've already provided.

You may need:

• Updated pay stubs

• Updated bank statements

• Documentation of earnest money or other deposits

• Documentation involving gift funds

• Records showing transfers between accounts

• Documentation of proceeds from the sale of another property

• Homeowners insurance information

• Additional asset documentation

• Updated employment or income verification

• Other documents requested during underwriting

This is often the point when a buyer says:

“Didn't I already send them that?”

You probably did.

But mortgage files aren't frozen in time. Some documents must remain current as you move toward closing, so an updated version may be needed.

It doesn't automatically mean there's a problem.

Sometimes, they simply need a newer document.

Meanwhile, Your Due Diligence Is Moving Too

At the same time, another important part of the transaction is happening: due diligence.

This is the period when you're investigating the property and making sure you're comfortable moving forward with the purchase.

Depending on the home and your circumstances, that may involve:

• Home inspections

• Pest or termite inspections

• Septic and well inspections

• Repair discussions

• Appraisal

• Survey

• Title investigation

• Insurance

• Financing and loan approval

So while you're sending financial documents to the lender, your agent, lender, inspectors, appraiser, insurance provider and closing attorney may all be working on different pieces of the transaction.

There's often much more happening behind the scenes than the buyer ever sees.

Your Money Suddenly Has a Paper Trail

Here's something many first-time buyers don't expect:

Once you're in the mortgage process, where your money comes from and where it goes can matter.

Maybe you transferred money from savings to checking.

Maybe a family member is giving you money toward your purchase.

Maybe you sold something and deposited the proceeds.

Maybe you're pulling money from an investment or retirement account for closing.

You know where that money came from.

The underwriter may still need documentation proving it.

That's why the weeks before closing are generally not the time to start moving large amounts of money around without talking with your lender.

If money needs to be transferred, ask how they want it documented.

If someone is giving you gift funds, find out what documentation will be required.

If an unusual deposit appears in your account, keep the records connected to it.

A pretty good rule during the mortgage process:

If money moves, keep the paper trail.

And Please Don't Buy the Furniture Yet

You finally have a house under contract.

Naturally, you start shopping.

A sofa would look perfect in the living room.

You need a dining table.

Maybe a new refrigerator.

And that new car would look awfully good sitting in the driveway.

Not yet.

Your lender qualified you based on a particular financial picture. Opening new credit, financing a large purchase, increasing credit card balances or taking on additional debt before closing can change that picture.

Your credit, employment, income and assets may be verified again before the loan is finalized.

So before making a major financial move while you're under contract, talk to your lender.

The furniture can wait.

First, buy the house.

Then Comes Underwriting

Underwriting is where your loan file gets a much deeper review.

The underwriter verifies the information being used to approve your mortgage and makes sure the file satisfies the requirements of your particular loan program.

And underwriting often comes with conditions.

That sounds intimidating, but a condition can be something as simple as:

• An updated bank statement

• A newer pay stub

• A missing page from a document

• Verification of a deposit

• An explanation of a transaction

• Additional employment documentation

• Proof of homeowners insurance

So when your lender asks for one more document, don't panic.

And don't let the request sit in your inbox for three days because it doesn't seem important.

When the lender asks for something, get it back to them as quickly as you can.

Every document is another piece of the file that needs to be completed before final loan approval.

Now You're Getting Close

For most of the process, you've been the person providing documents.

As closing approaches, you'll start receiving some pretty important ones too.

Early in the mortgage process, you'll generally receive a Loan Estimate, which provides estimated information about your loan, payment and closing costs.

Then comes your Closing Disclosure.

For most mortgage loans, federal law requires that you receive your Closing Disclosure at least three business days before closing.

This document shows the final terms of your mortgage, projected payment, closing costs and the financial details of the transaction.

Don't just scroll down looking for the amount you need to bring to closing.

Actually review it.

Compare it with your Loan Estimate and look at:

• Loan amount

• Interest rate

• Monthly principal and interest

• Taxes and insurance

• Closing costs

• Lender credits

• Seller credits, if applicable

• Cash needed to close

If something doesn't look right—or you simply don't understand it—ask before closing.

This is exactly why you're given time to review it.

The Closing Attorney Has an Important Role

As closing gets closer, the attorney's office becomes another important part of the process.

The closing attorney may be involved in the title examination, preparation or review of closing documents, coordination with the lender, handling closing funds and recording the necessary documents.

You'll likely receive instructions regarding your closing appointment, identification and any funds you need to provide.

Pay very close attention to instructions involving money.

Never assume wiring instructions received by email are legitimate.

Before sending money, independently verify the wiring information directly with the closing attorney's office using a phone number you know to be correct.

A home purchase involves too much money to take chances with wiring instructions.

At the Closing Table

Now comes the part you've been working toward.

The appointment.

The signatures.

And, yes...

More paperwork.

For a financed purchase, some of the major documents you'll typically encounter include:

The Closing Disclosure
The final breakdown of your mortgage terms and transaction costs.

The Promissory Note
Your legal promise to repay the money you're borrowing.

The Deed of Trust
The document that secures the loan with the property.

The Deed
The document from the seller transferring ownership of the property to you. This is generally executed by the seller and then recorded as part of the closing process.

There will also be additional affidavits, certifications, tax forms and loan-specific documents depending on the transaction.

Don't feel like you have to race through the signatures.

If you don't understand what you're signing, ask.

Signing Isn't Quite the Finish Line

This surprises some buyers.

Sitting at the attorney's office and signing all of your paperwork is generally referred to as settlement.

There is still another important step.

The attorney must complete the final title work, and the deed—and, when applicable, the deed of trust—must be recorded.

Closing occurs once that process has been completed, not simply when you finish signing your paperwork.

That's an important distinction when you're making moving plans or wondering exactly when those keys officially become yours.

Your Home File Starts Here

Remember when we talked about creating a home file and keeping the important documents connected to your house?

That file actually starts here.

After closing, don't throw everything into a random drawer and assume you'll never need it again.

Keep copies of your important purchase and property documents together, which may include your:

• Purchase contract and amendments

• Loan Estimate

• Closing Disclosure

• Promissory Note

• Deed of Trust

• Recorded deed

• Title insurance policy and title documents

• Homeowners insurance information

• Inspection reports

• Survey, if applicable

• Home warranty information

• Repair invoices and receipts

• Other important documents relating to the property

You may need some of these years from now when you refinance, sell, make improvements, file an insurance claim or simply need to answer a question about the property.

You'll be very glad you know exactly where they are.

The House Search Is Only the Beginning

You don't need to memorize every mortgage document before you start looking for a home.

You don't need to understand every underwriting term.

And you don't need to know exactly what will happen at every stage before making your first offer.

But you should know that buying a home involves much more than finding one you love.

Stay organized. Keep your documents. Respond quickly when your lender or closing attorney needs something. Don't make major financial changes without asking first. And when something doesn't make sense, speak up and ask questions.

A successful purchase has a lot of people working behind the scenes to move all of those pieces toward the same goal.

Finding the house starts the process. Getting everything from contract to closing is what turns that house into yours.

Please note: This article is based on typical residential real estate transactions in North Carolina. Procedures, terminology and legal requirements may vary in other states and may also differ based on the property, lender, loan program and individual transaction.