It can take up to 30 days after you’ve 

submitted a completed application to get 

an answer from a lender, though the wait 

may be shorter. If you’re approved, you’ll 

get a written commitment letter stating 

the terms of the loan agreement and how 

long you have to set a closing date.

If your application is successful, you 

should try to lock in the interest rate 

that’s available at the time it’s approved, 

with the understanding that if rates drop 

you’ll actually finalize the purchase at the 

lower rate. Some lenders charge a fee for  

a lock-in, which you can ask about when 

you do your initial research.

statistics from comparable purchases by 

comparable buyers to provide an objective 

measurement of the risk of approving  

your application.



Within three days of applying for a  

mortgage loan you should be mailed a 

good faith estimate (GFE) of what the 

closing, or settlement, fees will cost you 

if you use that lender. In addition, you’ll 

receive a 

Truth in Lending (TIL) form  

that states the APR and other details 

about your costs. 

You may want to apply to two or  

perhaps three lenders and use the GFE 

and TIL forms they provide to compare  

the offers and potentially negotiate a 

lower rate or lower fees. Remember, 

though, that these  

numbers are estima- 

tes, and they could  

change somewhat  

by the actual closing.



There are other ways to buy. You may want 

to investigate a rent-to-own arrangement or 

consider buying at auction. 

When you rent-to-own, you sign a 

contract with the owner that gives you an 

option to buy, with some or all of your lease 

payments being credited toward the agreed-

upon sale price. There are potentially some 

drawbacks, though, including the possibility 

the sellers will change their minds if real 

estate prices go up, so be sure to have an 

experienced local real estate lawyer review 

the contract before you sign. 

Auctions, where you can buy homes that 

have been repossessed or are being sold to 

settle an estate, can help you find a great 

house at a great price. But there are serious  

risks for inexperienced buyers. Unless 

you’re serious about becoming an auction 

expert, you may do better looking for short 

sales—homes that are  

being sold below value  

so that the sellers can  

pay off their loans at  

a price their lenders  

have agreed to accept.


If your application is turned down, there 

are a number of steps you can take.


You might apply to a different lender, as  

loan criteria vary among lenders


You might look for a less expensive home  

that will still meet your needs


You might work with a mortgage broker to 

find a lender, though there will be a fee


The Consumer Financial Protection 

Bureau (CFPB), acting on the changes 

mandated by Congress in the Dodd-Frank 

Act, prohibits qualified mortgages from 

including negative amortization provi-

sions, interest-only payments, balloon 

payments, terms longer than 30 years,  

or points and fees in excess of 3% of the 

loan amount—though third-party costs, 

including title insurance, taxes, and  

filing fees are exempt from the 3% rule. 

Negative amortization occurs when  

interest you haven’t paid is added to  

your outstanding principal.

There are exceptions, including  

those for mortgages in rural areas. And 

different rules apply to subprime loans, 

which have higher-than-market APRs.  

But if you have questions about the  

terms of a mortgage you’re offered,  

consult your lawyer and contact the  

CFPB at