How Does the Mortgage Process Work in NYC?

How does the mortgage process work in New York City?

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So, how does the mortgage process work in New York City? Well, the very first interaction you may have with a mortgage banker or broker in New York City is at the time you are actually beginning your home search. Now, you need to know what you can afford and a lender conversation with a banker is the easiest way to figure that out. So, you'll typically reach out to some lender. That's the first step.

The second step is they'll actually provide you with hopefully a pre-approval letter. Pre-approval letter is something you will need in the course of submitting offers for properties here in New York City. You could also potentially get a pre-qualification letter. This is something that requires a lower level of due diligence and underwriting on the part of the lender.

We recommend that whichever bank you utilize for your pre-approval is a household name. The reason is that when you submit your offer, you are going to get judged quite frankly by the seller and the listing agent if you have a pre-approval from Wells Fargo, that is a legit household name. Everybody has heard of Wells Fargo.

So, even if ultimately you do want to go with your very nice and fantastic local bank or some other non-household name, there's nothing wrong with that, just strategically it doesn't make sense to get a pre-approval from them because it may not give you the best result when it comes to negotiating. But the good news is that you actually don't have to technically shop for rates and make a firm decision on who to use for your financing most commonly until you're already in contract. So, you can get a pre-approval letter from anybody. It doesn't matter. It doesn't bind you to using them for the actual loan part of the process.

Now, once you're in contract, this is when you really have to get serious have conversations with various lenders. Find the one whose terms you like the most and actually go ahead and submit the application and undergo that process. You'll typically pay an application fee. You'll then be asked to submit a bunch of information, and documents, and the lender will also typically order an appraisal at this time. So, this really kicks off the formal process in terms of getting a mortgage.

So, you'll submit everything to the underwriters. Usually you won't hear back for a couple of weeks. Oftentimes it can take up to four weeks to, you know, hear back from the underwriters and along that journey, you may receive a request for some additional documentation.

So, the process and the timeline does vary by the lending institution that you are working with but with a bit of luck after a few weeks, you will receive a commitment letter from the lending institution and the commitment letter basically is their promise that they're going to give you the loan.

In most cases, the commitment letter will be a conditional commitment letter. In fact, it's very rare to find what's called an unconditional commitment letter. It's not too much of a problem though, because your typical commitment letters conditions are going to be very easy to satisfy.

For example, they might say, “you need to submit your most recent bank statement for your Chase account.” So, you will need to, then sort of start to fulfill these conditions prior to the lender giving you the clear to close in general. Though, if you work with a banker just make sure that you are doing everything you can to minimize the number of conditions that will appear on that letter because if you get a conditional commitment letter, and it has ridiculous conditions that you cannot satisfy, and you have a mortgage contingent transaction, you've technically satisfied the contingency and you've therefore lost the protection and the ability to back out of the deal the moment you receive that commitment letter.
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