When Do You Pay the Down Payment Money on a Mortgage Loan?

Reader Question: When during the mortgage process do you pay the down payment money?

You typically pay it during the closing process (also referred to as "settlement"). This is the process in which ownership is transferred from the seller to the buyer.

Your mortgage lender should tell you how much you need to bring for the down payment and other closing costs. They'll give you an estimate up front, when you apply for the mortgage loan. And then, a day or two before closing day, they will send you what's known as a HUD-1 settlement statement. This document will tell you exact amount you need to bring to the closing to cover the down payment, the origination fee, the appraisal fee and other closing costs.

Here's the typical process that takes place from house hunting to closing:

1. The home buyers get pre-qualified for a mortgage loan. This is not a final approval, but it does give the buyers a general idea of how much they can borrow.
2. After house hunting, the buyers find a suitable property and make an offer on it.
3. If the offer is accepted, the buyers then go back to their mortgage lender for approval.
4. Next, the lender will have the home appraised by a professional appraiser. They want to determine if it's truly worth the amount the buyers have agreed to pay.
5. If the home meets appraisal, then the buyers can schedule their closing day (a date that agrees with them, as well as the sellers and the lender).
6. During the closing process, the buyers will pay their down payment to the lender, along with whatever closing costs they owe. Once you find out what the total amount is, you can go out and get a cashier's check for that amount.

That's how it works in a nutshell. I hope that helps you out. The best advice I can give you is to stay in close touch with your lender between the time you get approved for the loan and the final closing.