28 Mar 10 Questions You Should Ask Your Mortgage Lender
Top Questions to Ask During the Mortgage Process
When starting your mortgage process, you may have a lot of questions swimming around your mind. You should feel like you can ask them all to your lender. Understanding your mortgage completely is a very important part of the process. We have put together a list of questions that are also important to ask, that may have not crossed your mind to know. This way you feel completely confident that you know your mortgage completely.
What Loans are Offered and What are the Qualifications?
There are many different kinds of loans you can get. It is good to know which ones you lender can offer you. Take time to understand the pros and cons of each, that way you can find which one fits your personal needs best. Ask what they recommend and why they would recommend that for you.
How Large of a Deposit do I Need?
Different types of loans have different deposit amounts. Most loans require a 20% down payment. But if you qualify for certain loans, the deposit could be lower. Generally, the loans with a lower deposit, tend to cost more in the end.
Do I Need to Pay for Private Mortgage Insurance (PMI)?
Sometimes if you pay 20% of the loan cost up front the PMI can be waved. It all depends on the loan type. Some loans require insurance for the entirety of the loan. Ask your lender what kind of insurance you need and how long you need it for. If you want to learn more about the PMI, click here.
What is the Interest Rate?
Your interest rate will be based off of your loan type and credit score. You interest rate with the mortgage balance will determine your monthly payment, so this is something useful to know. A way to get a better interest rate is to raise your credit score up as high as you can before you apply for a loan.
Is the Mortgage Rate Fixed or Adjustable Rate?
With a fixed rate mortgage, you keep the same rate for the whole life of the loan. Loan rate can change fairly often so this is a nice option to have. If you have a adjustable rate mortgage (or ARM) you will have interest rates that change at regular intervals. There is a hybrid option that gives you a fixed rate for the first part of the loan, then goes to a APM. If you do have an APM, make sure your lender tells you how long of a time period each interval is before the next adjustment.
What Fees Do I Have to Pay?
Some companies have one-time fees called points. These fees are 1% of the loan and are due at the closing of the loan. The nice things about these points is with each on your pay your interest will decrease. They are also tax deductible.
Is a Loan Rate Lock Available and if so, How Much is it?
A loan rate lock does along with an APM. This will lock your rate for a period of time so it doesn’t increase. One can usually be purchased for an additional fee. Most locks will last a few weeks to 60 days. This can be very helpful if the rate trend is increasing so you can pay a lower mortgage cost.
Is There a Payment Penalty?
If something happens to you economically and you want to try and pay your mortgage off quicker, it’s a good idea to ask about payment penalties. Some mortgage companies will charge you an additional processing fee for every overpayment. Other only charge you this fee if you pay off your mortgage in 2-5 years. It is good to know all the policies of this before signing for the mortgage loan.
Do You Offer Guaranteed On-Time Closing?
A main issue of your mortgage is closing your transaction on-time. Your purchase contact will contain a date to close, but this is all determined on the lender. If your lender can’t close on time, it could mean extra payment cost for you.
What Are the Closing Costs?
You as a borrower usually pay some fees after closing for services provided by the lender and other partied. The lender is required to provide a written estimate of these costs within three days of receiving the loan application. It’s good to know these in advance so you can know what company will works best with your needs.
There are many more questions you may have to ask your mortgage lender. Feel free to contact us and ask us any question you may have. We want to help you make your mortgage experience the best it ca be and hope to be able to help you feel comfortable with your mortgage loan.