Southampton - For most buyers, the ability to purchase a home and the price they can afford to pay is directly related to their ability to get a mortgage. By the way, the borrower doesn't "get" a mortgage. It "gives" a mortgage, a specific voluntary lien on the property to the lender, as security for the loan.

Since the ability to borrow has become such a critical factor in the process of buying and selling real estate, for insights into the current mortgage market I reached out to Christopher Minardi, a Licensed Mortgage Broker with The Manhattan Mortgage Company.

Christopher Minardi of The Manhattan Mortgage Company. (Minardi)

The first question I posed to Chris was, how often did he find that the bank's appraisals supported the price agreed to by the seller and buyer?

"Almost always. Sellers and buyers have become more realistic about real estate values. The seller doesn't want to lose a qualified buyer and the buyer doesn't want to lose a good buy."

Of course, these are the deals where the sellers and buyers have come to a meeting of the minds. This doesn't account for the unrealistic sellers and buyers who do not make it to the point of offer and acceptance.

I asked Chris if he finds the approval process taking longer than in the past.

"There is a lot more paperwork and government oversight, but if the mortgage broker stays on top of the process and the borrowers provide the necessary documentation, it shouldn't take any longer than in the past. After an offer and acceptance, I usually have at least 10 days before the parties go to contract, and I can usually close the loan in about 45 days from that time. I have also done it in 30. A conservative estimate would be 60 days. You have to realize, the lender is not only concerned with the qualifications of the borrower, but also the need to meet certain underwriting requirements so the loan can be sold on the secondary market, either to Fannie Mae and Freddie Mac or some other lender "

What else, Chris, besides having all of the necessary information available can a borrower do to expedite the loan application process, I asked.

"Get pre-approved. Let's find out now how much you will be able to borrow, not wait until you find the property you want to buy."

This is also a recommendation of real estate agents. A pre-approved buyer is a much more attractive prospect to a seller than one who isn't pre-approved.

For conventional loans, New York State Banking Law requires that if a buyer wants to borrow more than 80 percent of the property's value, the bank must charge PMI - private mortgage insurance. I asked Chris what he was experiencing with loan to value ratios. "The 80 percent LTV holds up with properties up to about a million dollars. Over that, the banks want the borrower to come up with a greater down payment, 70 to 75 percent, depending upon the amount. They might ask the borrower to pay "points" which can either take the form of pre-paid interest or origination fees. A mortgage broker can also charge the client 'points' for the mortgage broker's services."

A final question I asked Chris was what indicators he watches to gain insight on where the mortgage market is going.

"The yield on the 10 year Treasury note and what the Federal Reserve says. When the 'Fed' makes economic forecasts, that has a tremendous impact on the attitudes of the buying public."

Editor's Note: John will be teaching a 22.5 hours Real Estate Continuing Education class at Long Island University in Riverhead on March 21, March 23, and March 25. For information and registration contact Rosemary Malone at 631-287-8334 or by email at rosemary.malone@liu.edu.