1250 Broadway, 27th Floor New York, NY 10001


Before you even start shopping for a home, it may be best to get pre-approved for a mortgage, first.

So what’s a mortgage, you ask? Even though the etymology of the word comes from “mort,” meaning “death,” it’s not as bad as it sounds.

Since most people cannot afford to pay for a new house with all cash, that is where a mortgage comes in handy. A mortgage is a legal agreement between a home-buyer and a lender, in which the buyer promises to repay the loan over a period of time, usually over 15 to 30 years. (However, if a buyer fails to pay the required debt payments, the lender retains the right to take the property.)

Buyers will need to take a look at their credit scores and assess their current financial situation to make sure they qualify. The higher your FICO score, and the better your financials are, the more credit the lender will likely be willing to extend to you.

The first step is to find a lending institution or mortgage broker and provide them with your financial information, such as W-2’s, savings and investments, and any racked up debt. The lender will then review that information and assess how much they’re willing to lend.

Once pre-approved, there are several other costs that are factored into a monthly mortgage payment, such as interest, taxes, and homeowners insurance.

The interest on the loan is the lender’s “reward” for taking the risk of extending credit to you, and the governing rate will depend on the life of the loan, as well as your credit-worthiness. Further, every home-owner must pay applicable state and local property taxes, but can often bundle those additional costs into their monthly mortgage payments. Lastly, most buyers will be required to purchase insurance, which like real-estate taxes, can be made with each mortgage payment.

While individuals are usually free to own a home without having insurance, when securing a loan, a lender will typically require protection against floods, theft, and other disasters, as a condition of extending credit.

Another type of insurance is known as “PMI,” or private mortgage insurance, which is mandatory for people who buy a home with a down payment of less than 20% of the cost. (PMIs ensure that the lender is safeguarded in the event that the borrower defaults on the loan.)

Should you have any questions about mortgages, or about purchasing a home, please feel free to reach out to any one of our capable real-estate attorneys, at 212-619-5400.