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Monday, October 22, 2012

10 Questions to Ask Your Mortgage Lender Before You Get Your Loan.

10 Questions to Ask Your Mortgage Lender


When you’re looking for a mortgage, it’s vital to ask certain questions to each of your potential lenders so that you can make a fair comparison. Here’s our guide of the ten most essential questions to ask your lender.

What is the interest rate?

Rates are constantly in flux. Your interest rate on a mortgage is determined both on national rates as well as your credit. In case your lender doesn’t go into the details, here are some excellent tangential questions to ask during this conversation: is this a fixed or variable rate? Is this the best rate for my credit score?

What will I pay for discount and origination points? 

You probably pay attention to mortgage rates, but it’s also important to consider a mortgage company’s “points.” Ask your lender to explain these types of points and where they come from. They can be cost-effective, but you’ll want to ask the lender for a chart, as shown in this example

What are the closing costs?

Closing costs can be financed along with your mortgage or you can pay for them out-of-pocket. You can use an online calculator to determine approximate closing costs, but before you make the decision to obtain the mortgage, be sure to ask your lender what those fees add up to.

When can I lock in the rate?

In a volatile housing market, it can be crucial to lock in the lowest possible rates so that they don’t rise unexpectedly during the loan processing period. A locked-in interest rate is valid for a specific number of days; typically 30 days. As you might imagine, by locking in the rate, you won’t risk getting stuck with a higher interest rate; though you won’t be able to lower your rate if interest rates drop.

Are there any prepayment penalties?

It may be wishful thinking on your part, but it’s still good to know whether or not there will be a penalty should you pay off the loan or refinance it before the allotted time period is over. When you ask about prepayment penalties, find out how the penalty is calculated and the duration of the penalty period. If prepayment penalties aren’t a problem for you, your lender may agree to lower interest terms.

What is the minimum down payment?

Your mortgage will be based on the amount of money you can put down on the loan first. Typically, the larger your down payment, the better your loan terms – including monthly payments, and interest rates.  

What are the qualifying guidelines?

Your application for the loan will be a complete dossier of your life, and most of those documents will contribute to the loan’s qualifying guidelines. These requirements can be your credit history, income, employment, assets, and any liabilities, such as current debt. For those who worry about obtaining a loan, Veteran’s Association loans, first-time buyer programs, and government-backed loans have less stringent requirements, though they may require mortgage insurance and have higher rates. 


What are the required documents for a loan application?

Most lenders will require a proof of identity, income, and assets, including bank account statements, investments statements, current loans and debts, and values of life insurance policies and personal property, like cars. 

How long does loan processing take?

Get their best guess, but assume that most processing will take 45 to 60 days.

What may cause my loan to be delayed?

The length of time for loan processing depends a lot on how thorough your documentation is. As long as you’ve provided all the information accurately, the processing shouldn’t get held up. However, if the lender uncovers credit problems, it could delay the approval process. Also, be sure to notify your lender of any changes about your job, income, marital status, and/or debt.

10 Questions to Ask Your Mortgage Lender Before You Get Your Loan.

Posted on: Beverly Hills Real Estate-Beverly Hills Homes For Sale

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