What Is Underwriting?
Underwriting is the lender's process of verifying a borrower's income, assets, credit, and the property details to make a final decision on whether to approve a loan.
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The home-buying timeline, step by step
A typical financed U.S. purchase. Open a step to see what happens, the money involved and the usual timing. Your contract sets the real deadlines.
A lender reviews your credit, income and assets and states how much it is prepared to lend.
Timing: Before you search; letters are often valid for about 60 to 90 days.
Terms: pre approval, dti, credit score
You compare homes against your budget, including taxes, insurance and HOA dues - not just the price.
Timing: As long as it takes.
Terms: piti, comparable sales
You propose a price, contingencies, deadlines and any seller concessions; the seller accepts, counters or rejects.
Timing: Responses usually come within a day or two.
Terms: counteroffer, contingency, seller concession
Both sides sign the purchase contract, which sets every deadline that follows.
Timing: Day 0 of the contract.
Terms: under contract, contingency
You pay the good-faith deposit to the neutral holder named in the contract.
Money: Often about 1% to 3% of the price, by local custom.
Timing: Usually within a few business days of signing.
Terms: earnest money, escrow
A home inspector checks the condition; you can negotiate repairs or credits, or cancel within the inspection contingency.
Money: Inspection fees are paid up front.
Timing: Commonly 7 to 14 days after signing.
The lender's appraiser estimates value. A low appraisal can create a gap you must cover or renegotiate.
Money: The appraisal fee is often paid at application.
Timing: Commonly 2 to 3 weeks after signing.
Terms: appraisal, appraisal gap, appraisal contingency
The lender verifies everything and issues conditions, then "clear to close". Avoid new debt or large unexplained deposits.
Timing: Runs in parallel with the steps above.
Terms: underwriting, clear to close, rate lock
You confirm the home is in the agreed condition and any repairs are done.
Timing: Usually within a day or two of closing.
Terms: final walkthrough
You sign the loan and transfer documents and pay cash to close; you receive the keys. The Closing Disclosure arrives at least three business days before.
Money: Cash to close is due, usually by wire.
Timing: Commonly 30 to 45 days after signing for a financed purchase.
Terms: closing, cash to close, closing disclosure
Timing ranges are common practice, not rules. Cash purchases can close in one to two weeks.
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This definition is provided for general educational purposes and is not financial, legal, tax, or real estate advice. Verify important decisions with appropriately qualified professionals.
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