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If you’re like most people who buy a home, you take out a mortgage to finance the purchase. The process that lenders use to assess your creditworthiness is called underwriting.

Mortgage underwriting can be broken down into five key steps.

1. Get prequalified

Your very first step — even before you start looking for a house — should be to get prequalified for a loan. A lender will review your basic financial information, such as your income and your debts, and run a credit check.

Getting prequalified will help you determine what kind of mortgage fits your budget.

Check your credit score for free with myBankrate before you get prequalified.

2. Truth in lending

Be prepared to have your income verified and provide other financial documentation such as tax returns and bank account statements. A loan processor will confirm your information. The lender then will issue a preapproval letter, stating that it is willing to lend you a certain amount based on the information you provided.

A preapproval letter shows the seller that you’re a serious buyer and can back a purchase offer with bank financing.

Use Bankrate’s mortgage calculator to figure out how much you need.

3. Appraisal

Once you’ve found a house you like that fits your budget and have made an offer on it, a lender will conduct an appraisal of the property. This is to assess whether the amount you offered to pay is appropriate, based on the house’s condition and comparable homes in the neighborhood.

The cost of the appraisal will vary from a few hundred dollars to over a thousand, depending on the complexity and size of the home.

4. Title search and title insurance

A lender doesn’t want to lend money for a house that has legal claims on it. That’s why a title company performs a title search to make sure the property can be transferred.

The title company will research the history of the property, looking for mortgages, claims, liens, easement rights, zoning ordinances, pending legal action, unpaid taxes and restrictive covenants.

The title insurer then issues an insurance policy that guarantees the accuracy of its research. In some cases, two policies are issued: one to protect the lender and one to protect the property owner.

5. Closing time

The final step is closing day. The closing is when the bank funds your loan and pays the selling party in exchange for the title to the property.  This is when you’ll sign the final paperwork and settle any closing costs that may be due.

Closing costs for a $200,000 mortgage with a 20 percent down payment average $2,084 nationwide, according to the latest Bankrate survey.

This is the end of the process and your purchase is complete!