Mortgage Process

Mortgage process: Step by step

Be informed and in control when buying your home. Even though the process of getting your mortgage loan can seem intimidating, we’re on your side. At FirstMortgage, we know every case is unique, so we are with you every step of the way. 

Learn about:

  • Each step of the process
  • Pre-qualification
  • Pre-approval
  • Closing
  • How long does it take?

Understand the process

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  1. Evaluate your financial preparation

    • Take out a piece of paper and a pencil, it’s time to work out the numbers
    • Ask yourself, how much can you really pay for a mortgage
    • Consider how much money you have to invest in your home
    • Include funds for deposit and closing costs
    • Analyze your fixed payments (water, electricity, etc.) and variables like credit cards, auto loans, student loans, clothing expenses, and entertainment, among others
    • Estimate savings amount
    • Add the monthly amount you would have to pay for your home
    • If necessary, reorganize priorities and expenses to ensure your monthly payment
    • Our Mortgage Calculator will aid you in calculating payments
  2. Review your credit report

    • Request the 3 federal credit reports from the agencies that report them (Equifax, Experian, TransUnion) at least two months before applying for a loan
    • Get your free credit report once a year at www.annualcreditreport.com.
    • If you see any mistakes, omissions, or obsolete information, quickly request corrections. It is your legal right under federal law
  3. See your Loan Officer

    This first visit is very important, and it includes, among other things:

    • An analysis of your current income/credit situation
    • How much you can contribute for closing fees
    • The amount of credit you can receive
    • The mortgage’s interest rate
  4. Speed up the approval process: take these documents with you!

    Take the following personal financial information to your meeting:

    • Your social security number, birthdate, marital status, number of dependents, current address, and phone number.
    • Copy of your tax information for the last two years
    • Employment information
    • Creditor and debt information
    • Deposit and retirement plan information
    • Evidence of closing fees and down payment funds
    • Recent payroll evidence
  5. Get a pre-qualification

    This document, provided by your Loan Officer, will save you time when looking for a home that fits your needs. It indicates:

    • the amount the bank is willing to lend you
    • what your monthly payment will be
    • the type of loan you might qualify for 
  6. Request a pre-approval

    If you haven’t identified or optioned a property, you may also request a mortgage pre-approval during your initial visit. We will gladly evaluate your income, credit, and debts to identify the loan amount you are eligible for. Visit us at one of our Mortgage Centers!  

    Pre-approval does not constitute a loan request. It will be provided no later than 72 hours after it is requested, and interests are guaranteed for 30 days after the date it is granted. 

  7. Search for your ideal home

    Start your search across classified ads, listings, or the internet, or hire a real estate agent to help you find the home of your dreams. 

    Keep in mind that acquiring a home is an investment in your future, and it will influence every aspect of your family life. Make sure it fits your needs. Research locations, the number of rooms and bathrooms, among others. 

  8. Present your mortgage request

    Fill out the online mortgage request here. If you prefer, visit one of our Mortgage Centers and complete it with one of our Loan Officers.

  9. Approval and processing of your loan

    Your case is assigned to an analyst to confirm if you qualify for the offer made during the interview. The analyst is responsible for verifying all your data, evaluating it, and recommending the product and the offer that best fits your needs. 

    During this step: 

    • Income, assets, and debts of the applicant are verified
    • An appraisal of the property is done to determine its market value
    • The availability of funds to close the loan is confirmed 
  10. Closing

    You did it!

    The closing is the last meeting where all parties sign the final documents and the property is legally transferred to you.

    After signing the deed before a notary, the notary inscribes the transaction in the Property Registry. The mortgage process is completed, and you are the official owner of your home. 

    Congratulations! Now it’s time to enjoy your new home.

How long does the whole process take?

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It mostly depends on how ready you are to complete it And if the property has no legal issues or repairs to get done before closing. 

Your Loan Officer is responsible for clearly guiding you step by step through each mortgage stage. 

At FirstMortgage, our Loan Officers are available to help you from start to finish. We are here to serve you. 
Call us today at 787-760-8100.

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Glossary of Terms

A

Amortization

Regular payments of a debt consisting of an amount that reduces the principal of the debt another amount that pays the interests.

Applicant or Principal Debtor

Person or legal entity that applies for the loan and is obligated to repay the debt.

Appraisal

Report made by a qualified appraiser that sets forth the appraiser’s opinion about a real property’s market value, which is determined by investigating and conducting studies on the property.

ARM (Adjustable Rate Mortgage)

This type of financing offers various benefits. Its initial interest is fixed during a term and then gets adjusted periodically. Both the term of the first interest revision as well as the subsequent revisions are established at closing and can be for 1 year, 3 years, or 5 years. The interest rate will be adjusted according to the changes in the index established at the closing of the loan. After each adjustment, the type of interest remains fixed until the next adjustment. This type of mortgage loan gives the client the advantage of repaying the loan with an initial interest rate that is lower than the prevailing one in the market and offers the stability of maintaining a fixed interest rate between adjustment dates.

B

Bankruptcy

Occurs when a person is legally declared insolvent or incapable of paying his debts and requests the Federal Bankruptcy Court to administer his assets and divide them among his creditors.

C

Co-applicant or co-debtor

 Any additional borrower(s) whose name(s) appear on loan documents and whose income and credit history are used to qualify for the loan. Under this arrangement, all parties involved have an obligation to repay the loan. For mortgages, the names of applicable co-borrowers also appear on the property's title.

Consumer Credit Counseling of PR Inc.

Non-for-profit organization that offers free services to consumers who are in a precarious economic situation, to help them evaluate and reorganize their resources and obligations, and if possible, establish payment plans with their creditors.

Conventional Mortgage Loan

A mortgage that is not insured or guaranteed by the government, FHA, VA, or Rural Development. There are two types of Conventional Mortgage, Conforming, and Non-Conforming Loans. For Conforming Loans, corporations from secondary markets establish the loan requirements. For Non-conforming Loans, financial institutions establish the requirements.

F

Fannie Mae (FNMA – Federal National Mortgage Association)

Corporations dedicated to purchasing conventional mortgage loans in the secondary market.

FHA (Federal Housing Administration)

FHA's mortgage insurance programs help low- and moderate-income families become homeowners by lowering some of the costs of their mortgage loans.

Foreclosures

Legal proceedings that declare the debt due and demand total payment of loan balance. It is used by the creditor when the debtor does not meet the obligation of paying the loan or otherwise breaches the agreements set forth in the Note or Mortgage Deed. The debt is satisfied with the proceeds of the judicial sale (at auction) of the property used as security.

Freddie Mac (FHLMC – Federal Home Loan Mortgage Corporation)

Corporations dedicated to purchasing conventional mortgage loans in the secondary market.

G

Ginnie Mae (GNMA – Government National Mortgage Association)

Federal agency that is dedicated to purchase mortgage loans that are guaranteed by FHA, Rural or VA in the secondary market.

L

LTV (Loan-to-Value Ratio)

Ratio between the mortgage loan and the value of the property. It is calculated by dividing the amount of the loan by the sales price or the value of the appraisal, whichever is lower.

M

MGIC (Mortgage Guarantee Insurance Corporation)

Private mortgage insurance company that backs conventional mortgage loans..

Mortgage Insurance

Mortgage Insurance (also known as mortgage guarantee and home-loan insurance) is an insurance policy which compensates lenders or investors for losses due to the default of a mortgage loan.

P

Payment by Assignment of Property

Voluntary delivery of the property to the creditor in exchange for paying off of the loan. It is a tool used by debtors to avoid mortgage foreclosures, collection actions or other legal actions.

Prepayment Penalty

Clause in the note that establishes that the bank can charge you a penalty if the loan is paid off before a set date. This penalty is regulated by the Commissioner of Financial Institutions.

Primary Residence

Residential property occupied by the owner of the property for most of the year.

R

Rural Development (previously Farmers Home)

Federal agency that provides home ownership opportunities to low- and moderate-income and rural areas through several loan, grant, and loan guarantee programs.

S

Sales Agreement

Agreement between the buyer and the seller of a property where the price and the terms of the transaction are defined.

Second Home

Residential property that the owner physically occupies only part of the year and uses it for rest and recreation.

T

Transfer Clause (Due-on-sale)

Clause present in certain mortgage contracts. The clause establishes that, if a buyer is interested in acquiring the property and taking over the remaining debt, they must request consent. Should consent not be granted, the bank may declare the debt expired and demand the payment of the balance to the original debtor.

V

Veterans Loan (Department of Veterans Affairs)

Federal Agency that provides a home loan guaranty benefit to veterans or their widows, reservists, and eligible members of the National Guard. VA guarantees a portion of the loan, enabling the lender to provide you with more favorable terms.

Elements about the sales agreement

Are you ready to buy a home? From pre-qualification, appraisal and contract, to closing your mortgage, here you can find everything that happens during the financing process of each sales agreement.  

Here you will find:

  • What is a sales agreement?
  • Sales agreement components

What is a sales agreement?

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A sales agreement contract is an agreement signed between you and the seller of the property. It establishes the terms of this sales agreement. Here, the terms are established, and an agreed price is reached by both parties. 

Essential elements during the financing process of a sales agreement

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  1. Pre-qualification: Before looking for a property, this document allows you to identify the loan amount you are eligible for. This way you can focus on properties that are within your budget. You can fil your pre-qualification information at any FirstMortgage branch.
  2. Appraisal: This serves as an instrument to better negotiate the price of a property at the time of making improvements to the property, buying, refinancing or selling. We compare similar sales and competitive market lists where the residence is located.
  3. Credit score: One of the most influential factors when figuring out the kind of loan a financial institution will give you, the interest rate given, and the guarantees required as part of the transaction is the credit score. Your score will fluctuate between 300 and 850 points. The higher your score, the better your credit is and the better the loan conditions you will get. You can request a free credit report once a year at www.annualcreditreport.com.
  4. Sales agreement contract: The document between the buyer and the seller of the property in which the price and transaction terms are agreed upon. It is important to include the date and signature of all parties involved in this document for validity. 
  5. Loan application: Documents that officially begin the mortgage process. To determine which loan suits you, it is important that you provide all the documentation and information in your application. Sales agreement cases should include the contract and evidence of the option given (cancelled check or “escrow” with the seller or “realtor”). 
  6. Loan estimate: Offers a clear estimate of all the terms of the transaction proposed by the bank. This document helps you determine if you would like to continue with the transaction. The bank will return it to you in 3 business days after you present your loan application. 
  7. Closing disclosure: Offers clear details regarding the loan charges for you to better understand the costs of the transaction. You will receive your copy at least 3 business days before closure. 
  8. Closing costs: In the case of a sales agreement, the closing costs are generally not part of the loan and will depend on the loan amount. Get to know the costs incurred for the owner and for the buyer here: 

Unless agreed otherwise, the seller pays:

  • The Real Estate agent’s commission (if applicable) 
  • The sales agreement fees
  • Original sales agreement deed stamps
  • Deed cancelation fees, stamps and vouchers

Unless agreed otherwise, the buyer pays:

  • Appraisal
  • Fees
  • Deed stamps and vouchers
  • Certified deed copy stamps and vouchers
  • Title study
  • Plot Plan
  • Flood certification
  • Credit report
  • Title policy
  • Owner’s policy
  • Hazard policy
  • Origination, discount fees in accordance with the offer or interest selected

We are here to provide you with all the information you need. We know how hard the process of buying your new home can seem. Visit us so we can guide you through the many financing options, the assistance available, and the steps you should follow to make the process toward buying your new home much easier. Contact us and make your appointment today!

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Mortgage Process

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Each case is unique

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Contact our mortgage consultants to guide you step by step throughout the mortgage process.

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