What happens when you buy a home, and in what order
Buying a home is a sequence of decisions and paperwork, not a single transaction. You get pre-approved for a mortgage, find a property, make an offer, have the home inspected, lock in your interest rate, and close — which means signing documents and transferring money to the seller. The whole process usually takes 30 to 45 days from offer to closing, though it can stretch longer if inspections reveal problems or if your lender asks for more documents.
The steps are not optional or reorderable. You cannot close without a mortgage commitment. You cannot get a mortgage commitment without an appraisal. You cannot make a competitive offer without knowing how much a lender will give you. Each step depends on the one before it, and delays at any point push everything back. Understanding the sequence means you know what to expect and what to do when.
Key Takeaways
- Get pre-approved for a mortgage before you look at homes, so you know your budget and can make an offer quickly when you find the right property.
- The home inspection happens after your offer is accepted and is your chance to walk away or renegotiate if the house has serious problems.
- Your lender will order an appraisal to confirm the home is worth what you are paying; if it appraises lower, you may need to renegotiate or add more cash.
- Closing takes place 30 to 45 days after your offer is accepted and involves signing loan documents, getting homeowners insurance, and transferring the deed.
- Closing costs — paid to the lender, appraiser, inspector, title company, and others — typically run 2 to 5 percent of the home price and are separate from your down payment.
Getting pre-approved: what a lender will actually tell you
Pre-approval is a lender's written statement of how much they will lend you, based on your income, debts, credit score, and savings. It is not a promise to lend — it is conditional on the home appraisal, a final background check, and verification that nothing changed with your job or credit since you applied. But it is specific enough to use when you make an offer.
To get pre-approved, you will need to provide recent pay stubs, W-2 forms or tax returns (usually the last two years), bank statements showing your down payment savings, and permission for the lender to pull your credit report. The lender will also ask about any debts: car loans, student loans, credit cards, child support, or other monthly obligations. They use this to calculate your debt-to-income ratio — the percentage of your gross monthly income that goes to debt payments. Most lenders want this to be 43 percent or lower, though some will go higher if your credit is strong.
Pre-approval usually takes three to five business days. You will receive a letter stating the loan amount, the interest rate (which is a rate lock for a limited time, usually 30 to 60 days), and any conditions the lender needs met before closing. Bring this letter when you make an offer; sellers and real estate agents take it as proof you can actually buy.
Finding a home and making an offer
Once you are pre-approved, you can search for homes within your budget. Most people use online listing sites or work with a real estate agent who has access to the local multiple listing service (MLS). The agent does not charge you — the seller pays the commission, split between the seller's agent and the buyer's agent. If you do not have an agent, you can still make an offer, but you will be negotiating directly with the seller or their agent.
When you find a home you want to buy, you make a written offer that includes the price you will pay, the down payment amount, the closing date, and any contingencies — conditions that must be met for the sale to go through. The most common contingencies are the home inspection, the appraisal, and the mortgage commitment. A contingency means you can walk away or renegotiate if that condition is not met. For example, if you make an offer contingent on the appraisal and the home appraises for less than your offer price, you can ask the seller to lower the price, pay the difference yourself, or cancel the deal.
The seller can accept your offer, reject it, or make a counteroffer with a different price or terms. This back-and-forth can take days. Once both sides agree and sign, you have a binding contract and the clock starts on your 30- to 45-day closing timeline.
The home inspection and what to do if problems appear
After your offer is accepted, you hire a home inspector — a licensed professional who spends two to three hours examining the roof, foundation, plumbing, electrical system, HVAC, and other major components. The inspection costs $300 to $500 and is your chance to learn about problems before you own the house. You have the right to be present during the inspection and to ask questions.
The inspector produces a written report listing everything they found: minor issues like caulking around windows, major issues like a roof nearing the end of its life, and anything in between. You then have a set number of days (usually five to ten) to decide what to do. You can ask the seller to fix the problems, ask for a credit toward repairs, ask for a price reduction, or walk away if the problems are too serious. The seller can agree, refuse, or offer a compromise.
If you and the seller cannot agree on repairs or credits, and you have an inspection contingency in your contract, you can cancel the deal and get your earnest money back. If you do not have an inspection contingency, you are stuck with the problems. This is why the inspection contingency matters: it gives you an exit if the house is in worse condition than you expected.
The appraisal, the rate lock, and what happens if values drop
Your lender orders an appraisal — a professional assessment of what the home is worth — to make sure they are not lending you more than the property is worth. The appraiser visits the home, measures it, photographs it, and compares it to similar homes that sold recently in the area. The appraisal usually takes one to two weeks and costs $400 to $600, which you pay.
If the appraisal comes in at or above your offer price, you move forward. If it comes in below your offer price, you have a problem: your lender will only lend based on the appraised value, not the price you agreed to pay. If you offered $300,000 and it appraises for $280,000, the lender will only lend 80 percent of $280,000, not $300,000. You then have to make up the difference in cash, ask the seller to lower the price, or walk away if you have an appraisal contingency.
At the same time, your lender locks in your interest rate — the percentage you will pay on the loan. The rate lock is usually good for 30 to 60 days. If rates drop during that time, you cannot take advantage of the lower rate. If rates rise, you are protected. Some lenders offer a "float down" option that lets you lock in a lower rate if rates drop, but this usually costs extra or requires a higher rate to start.
Final underwriting and the clear-to-close
While the appraisal is happening, your lender's underwriting team reviews everything: your income, debts, credit, the property, the appraisal, and the title search (a check that the seller actually owns the home and that there are no liens or other claims against it). Underwriting usually takes one to two weeks. The underwriter may ask for more documents — a letter explaining a late payment, proof that you paid off a credit card, or verification of a recent job change.
Once the underwriter is satisfied, they issue a "clear to close" — permission for the lender to fund the loan. This usually happens three to five days before closing. At this point, you are very close to owning the home, but the deal is not final until you sign the closing documents and the money is transferred.
Closing: what you sign and what you pay
Closing is the final meeting where you sign the loan documents and the deed is transferred to you. It usually takes place at a title company, a real estate attorney's office, or the lender's office. You, the seller, the real estate agents (if any), a title company representative, and sometimes a lender representative are present. The meeting usually lasts one to two hours.
You will sign the promissory note (your promise to repay the loan), the mortgage or deed of trust (the lender's claim on the home if you do not pay), the closing disclosure (a summary of the loan terms and closing costs), and the deed (the document that transfers ownership to you). You will also sign disclosures about lead paint, flood zones, and other hazards. Read these documents before closing, or ask the title company to explain anything you do not understand.
At closing, you pay your down payment and closing costs. Closing costs typically run 2 to 5 percent of the home price and include the appraisal, inspection, title search, title insurance, lender fees, attorney fees (in some states), property taxes, homeowners insurance, and other charges. A $300,000 home might have $6,000 to $15,000 in closing costs. The title company will send you a closing disclosure at least three days before closing so you know the exact amount.
Once you sign everything and the money is transferred, the deed is recorded with the county and you own the home. The title company gives you the keys, and the seller leaves. You are now a homeowner.
What to do before closing day
In the week before closing, do a final walkthrough of the home to confirm that any agreed-upon repairs were completed and that the seller has removed their belongings. Check that utilities are in your name or will be transferred. Confirm your homeowners insurance is in place — your lender requires proof before they will fund the loan. Review the closing disclosure one more time to make sure the loan terms and costs match what you expected.
Bring a government-issued ID and a cashier's check or arrange a wire transfer for your down payment and closing costs. Do not bring a personal check — title companies will not accept it. Ask the title company in advance how they want you to send the money and whether there are any wire transfer fees.
Frequently Asked Questions
What is the difference between pre-approval and pre-qualification?
Pre-qualification is a rough estimate based on information you provide over the phone or online; the lender does not verify anything. Pre-approval is a formal review of your credit, income, and debts, with verification of documents. Pre-approval is what you need to make a competitive offer.
Can I back out of the deal after my offer is accepted?
Yes, if you have contingencies in your contract — inspection, appraisal, or mortgage commitment. If you back out without a valid contingency reason, you lose your earnest money (usually 1 to 3 percent of the offer price). If you back out because the appraisal is low or the inspection finds major problems, you keep your earnest money.
What if I cannot afford the closing costs?
You can ask the seller to pay some or all of your closing costs as part of the negotiation. This is called a seller concession. There are limits — lenders typically allow sellers to pay 3 to 6 percent of the purchase price toward the buyer's costs, depending on your down payment size. You can also look for down payment and closing cost information programs through your state or local housing authority.
Do I need a real estate agent to buy a home?
No, but it is harder without one. Agents have access to the MLS and know local market conditions. They also do not charge you directly — the seller pays their commission. If you buy without an agent, you negotiate directly with the seller or their agent, and you handle all the paperwork yourself.
What happens if the seller does not move out by closing day?
This is rare but serious. Your contract should specify a move-out date and what happens if the seller stays. Some contracts allow you to charge the seller rent for each day they stay past closing. If the seller refuses to leave, you may need to file an eviction, which takes weeks. Discuss this scenario with your real estate agent or attorney before closing.