Securing a mortgage is one of the biggest steps in achieving the dream of home ownership. The process can be complicated though, especially for first time homeowners. The actual length of the process can also be daunting, which is why it’s best to have the right help on your side. At Bethpage Federal Credit Union, we understand the process and are ready to help with any questions or concerns you may have.
We have answered some of our members’ most frequently asked questions here to help get you started. If you have a specific question that has not been addressed, though, be sure to contact our BFCU experts for more information.
What is a mortgage?
A mortgage is a loan from a financial institution secured by real estate that is the borrower’s home or investment property. A borrower can use a mortgage to purchase a new home, refinance a current home or raise funds for any purpose by using their property as collateral.
What is a mortgage lender?
A mortgage lender is a financial institution that offers and underwrites (approves and accepts the risk for) home loans.
Can I apply for a mortgage online?
Yes. Bethpage offers two options for online application. With our Mortgage Quick Apply, provide some basic information and a mortgage specialist will walk you through each step of the process.
What are the requirements to get a mortgage?
The requirements differ, depending on the type of mortgage you are seeking. Conventional mortgages (not federally insured) usually require a minimum down payment of 5%, a credit score of at least 660, steady income for at least the past two years, and a debt-to-income ratio (total debt divided by gross income) of 50 percent or less. Government-backed programs may be less restrictive.
What is the difference between a fixed-rate and an adjustable-rate mortgage?
The difference between a fixed-rate and an adjustable-rate mortgage lies in the interest rate for the loan. For a fixed-rate mortgage, the interest rate is set when you take out the loan and will not change. The fixed interest rate allows borrowers a measure of predictability. With an adjustable-rate mortgage, the interest rate may increase or decrease. The borrower assumes the risk of interest rate increases in exchange for lower initial rates and lower initial mortgage payments.
What is an FHA loan?
FHA loans are insured by the Federal Housing Administration, a division of HUD (the Department of Housing and Urban Development) and are one of the most popular government mortgage programs. FHA loans require lower minimum down payments and credit scores than many conventional loans.
What is the best way to begin the home purchasing process?
As a first-time buyer, the first step in purchasing a home is to determine what exactly you can afford. By using one of the several calculators on our website, you will be able to figure out affordability in relation to finances, credit score and other information.
Can you help me decide the price of the house with the payment I can afford?
You can use our affordability mortgage calculator to get an estimate. Once you’ve completed a full loan application, a Bethpage expert can help you determine your price range. An affordable home price is usually about 30 percent of gross monthly income (including taxes and insurance), although many factors can alter this.
Can I be pre-qualified for a loan by Bethpage and get a letter to show to my potential seller?
If everything seems to be in good standing on your application, you will be able to obtain a pre-qualification letter. Although it is not necessary to be pre-qualified, it is highly recommended before making an offer. It demonstrates to both you and to sellers how much house you can afford. It can be frustrating for both buyers and sellers to agree upon an offer, only to find out the buyer is unable to qualify for it.
What is the difference between pre-qualified and pre-approved?
Pre-qualification is based solely on the data you give in your loan application. From this information, your lender can provide a ballpark estimate of how much you can borrow, but your pre-qualified amount isn’t yet a definite thing. Pre-approval is a commitment in writing for an exact loan amount, after your lender has taken a closer look at, and verified, your financial situation and history.
What documents do I need to get a mortgage?
For a first mortgage or refinance, most borrowers will need:
- Most recent pay stubs covering the last 30-day period
- Past two years of W-2 Forms from all employers (current & previous)
- 2 most recent bank statements (all pages). Include all accounts used for transaction
- Past 2 years of Federal Tax returns (1040 Form) with all pages and schedules (if applicable, self-employed/rental income/retirement income)
You won’t need to provide a copy of your credit report. Your lender will request that directly from report providers.
Additional items you will need when purchasing a new home:
- Your attorney’s contact information
- Your realtor’s contact information
- Copy of fully executed and dated Contract of Sale
How long does it take to get a mortgage?
It can feel like forever when you are waiting anxiously for word, but the average time it takes to get a mortgage is between 30 and 45 days. It can take longer if any of your financial information is difficult to verify or if you are applying for a government-insured loan such as an FHA or VA mortgage.
What is the difference between mortgage insurance and homeowners insurance?
Homeowners insurance covers your losses in case of any damage to your residence or furnishings from causes like fire, wind, etc. Homeowners insurance also provides liability coverage against accidents on your property. Mortgage insurance, on the other hand, is for your lender’s protection. It is usually required if your down payment is less than 20 percent of your home’s purchase price, and it pays out to your lender if you default on your mortgage payments.
What is escrow in mortgage lending?
Escrow is a financial arrangement in which two parties enlist a third party to temporarily hold money or other assets on their behalf. When you get a mortgage, your lender is likely to set up an escrow account. Every month, the lender puts aside the money from your mortgage payment for property taxes, homeowners insurance and private mortgage insurance (if applicable) into this account and pays them when they are due. (This is different from the escrow account used to hold your good-faith deposit until closing.)
What are closing costs?
Closing costs are the assortment of fees associated with getting a mortgage, all of which are paid at the end of the process. Closing costs can include fees for the home appraisal, credit check and title search, but they may vary from state to state.
How do I estimate the cost of my mortgage?
Check out our rates, and try our mortgage calculators to estimate your monthly payments or see how choosing different mortgage terms and types might affect them.
Can I lock in my mortgage interest rate?
When you get a fixed-rate mortgage loan from Bethpage, you can lock in your interest rate — at no charge — for 60 days.
What is the difference between interest rate and APR?
The interest rate is the annual cost of borrowing the principal amount of your loan. The APR is the annual cost of the loan —including fees. APR includes charges such as mortgage insurance, some closing costs, discount points and loan origination fees. It’s intended to give you more information about what you’re really paying and allow you to accurately compare different loans.
Ready to Get Started?
If you have the information you need to apply for a first mortgage or a refinance with BFCU, we’re excited to help you get started. So “get set” by checking out our Bethpage mortgage options and then go!
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