Rates & resources

Several factors determine your eligibility for a mortgage loan, including your credit history, repayment capacity, loan amount, and the value of the collateral being financed. Undergoing a prequalification or preapproval process can assist you in assessing your qualifications as a borrower and understanding the loan terms that best suit your circumstances.

When a borrower seeks pre-qualification from a mortgage lender or broker, they are typically asked to provide details regarding their debts, income, and assets. The lender may also request supporting documentation to validate the information provided, enabling them to estimate the potential loan amount the borrower may qualify for.

During the pre-approval stage, the lender or broker submits the borrower’s information and documentation to an underwriter who will assess and either approve or deny the application. If approved, the pre-approval is contingent upon the identification of a property and the collection of relevant documents such as an appraisal and title report.

Pre-approvals are often preferred by sellers when evaluating offers. To gain more insight, it is advisable to consult with your seller or Realtor for further guidance.

The interest rate applicable to a mortgage is determined by the chosen mortgage type. Fixed-rate mortgages have interest rates that remain unchanged throughout the loan term. On the other hand, for an adjustable-rate mortgage (ARM), the interest rate may change after a specific period and at subsequent intervals in the future.

Private Mortgage Insurance (PMI) is provided by a private insurance company when the loan amount exceeds 80% of the home’s value. The home’s value is determined by the lesser of the appraised value or the sales price in purchase transactions (except in NY, where the appraised value exclusively determines the need for PMI). At BFR, we collaborate with lenders who offer lender-paid mortgage insurance, so please consult your loan officer to explore this option. Additionally, we provide 80/10/10 “piggyback” mortgages as an alternative to avoid mortgage insurance. While it is often recommended to avoid mortgage insurance, it is important to note that FHA insured loans require mortgage insurance premiums.

The documents required for getting a mortgage vary from borrower to borrower. The most commonly requested documents are pay stubs, W-2s, tax returns, banks statements and photo ID.

During a purchase transaction, the transfer of ownership occurs at the closing. This involves the borrower signing the promissory note and the security instrument, typically with the presence of attorneys, buyers, sellers, real estate agents, and the title company. The closing process finalizes the transaction, and you will receive a folder containing the closing documents for your record-keeping purposes.

The closing stage of a mortgage involves various fees, such as attorney fees, title insurance fees, documentation fees, appraisal fees, and pre-paid interest fees. The total cost associated with closing varies depending on the specific type of mortgage selected by the consumer.