Thanks for joining us for part 4 of our five-part blog series about setting up expectations during the home buying process. This series covers:

  1. Introduction (August blog posted; see here: link)
  2. Escrow Process (September blog posted; see here: link)
  3. Disclosures & Investigation Responsibilities (October blog posted; see here: link)
  4. Financing Process (This blog post)
  5. Pre-Closing & Final Steps (December blog post coming)

Parts 2-5 of this series are split into two parts—one tailored for buyers, like this post, and one for sellers—because the concerns and responsibilities can differ greatly depending on your role in the transaction. Now, onto the Buyer Financing Process!

Unless you’re fortunate enough to purchase your new home without a mortgage, you’ll need to navigate the lending process. This phase can often feel like the most challenging part of your home purchase — but remember, patience is key. After all, if you were lending someone this much money, wouldn’t you have a lot of questions and requirements too?

During your purchase process, you’ll encounter two key contingencies: the appraisal contingency and the loan contingency. While they sound similar, they serve very different purposes.

The Appraisal Contingency

The appraisal contingency focuses on the property. It represents an independent opinion of the home’s fair market value and is used to protect the lender’s investment. Lenders want to ensure they’re not lending more than a certain percentage of the property’s value. In a conventional loan, this is typically 80% of the home’s appraised value, not necessarily 80% of the purchase price.

This protects the lender in two ways:

A. If the borrower defaults, a foreclosure sale should generate enough funds to cover the loan balance.

B. With 20% or more of their own money in the deal, buyers are less likely to walk away when times get tough.

An appraiser is assigned to inspect and analyze the property, then deliver an opinion of value. However, not all appraisers are created equal—experience and local knowledge matter. It’s important that your agent meet with the appraiser, confirm their familiarity with the area, and share any relevant insights about recent comparable sales or market trends that might not yet appear in historical data. Such sharing of information can make a difference.

The Loan Contingency

The loan contingency focuses on you—the buyer—and whether you’re creditworthy. This is the part of the process that often feels the most invasive, filled with document requests, verifications, and seemingly endless follow-ups.

Here are a few tips to make the process smoother:

  • Stay organized. Keep a protected folder on your computer with copies of all documents you’ve sent your lender. They may request the same items again.

  • Include identifying details. Make sure statements clearly show your name, account number (partially redacted is fine), and dates.

  • Be patient with your loan representative. They’re gathering documentation for the underwriter and are on your side.

  • Be clear and responsive. Prompt, complete answers help keep things moving.

  • If self-employed, prepare for extra scrutiny. Expect to provide additional documentation and explanations. If your financial picture is complex, your agent can help match you with an experienced lender.

  • Avoid big financial changes. Don’t make large purchases or move funds between accounts during escrow — lenders dislike uncertainty and it could jeopardize your approval.

Key Steps in the Financing Process

  1. Pre-Approval: Aim for pre-approval rather than pre-qualification. Pre-approval means your lender has verified your financials and determined you meet their criteria.
  2. Loan Estimate: You’ll receive this early in the process. It outlines preliminary costs and loan terms so you can compare lenders. Keep in mind that switching lenders mid-escrow can cause timing issues.
  3. Rate Lock: Once you’ve selected your lender, you can “lock in” your interest rate at the right time to protect against rate increases before closing.
  4. Conditional Approval: This means your loan is approved subject to conditions—usually additional documentation or clarifications. This is typically when your loan contingency is due or about to be. Work closely with your lender and agent to determine whether all conditions can be met before you remove this contingency.
  5. Closing Disclosure (CD): This final disclosure mirrors your initial Loan Estimate and compares estimated costs to final costs. Federal law requires a three-day review period before you can sign loan documents.
  6. Clear to Close: Once all conditions are satisfied, your lender issues a “Clear to Close” and prepares final loan documents to send to escrow.
  7. Signing Loan Documents: You’ll sign your loan package at the escrow office or with a traveling notary.
  8. Funding and Recording: Once you’ve signed, escrow returns the documents to the lender for review. The lender will confirm that your buyer’s funds have been received into escrow before releasing loan funds. Timing is crucial here—avoid sending your final funds at the last minute.

The financing process involves many moving parts, and timing truly matters. Missing information or delays in responding can push your file to the back of the line, especially with lenders operating in different time zones. A strong, responsive loan representative makes all the difference — someone who understands the urgency of your escrow timeline and ensures everything is ready when your moving truck arrives.

Leverage the strength of Vista Sotheby’s. Experience the dedicated attention of Team Plunkett. Buy with confidence.

Note: Some details may vary by region. Always consult your agent and lender for guidance specific to your local market.