10 Questions to Ask Your Mortgage Lender

Posted by  on Aug 02, 2010
 

There are certain things you need to find out before buying a house and obtaining a mortgage. Through the mortgage process, you should be in control, and therefore have every right in the world to demand knowledge and satisfactory answers. Here is a comprised list of questions to help you along the process to getting a mortgage.

What is the interest rate I will be getting with this mortgage?

Of course! The first thing you must find out involves the interest rate that you will need to pay on the loan you are taking out. Ask the rates of other lenders as well so you can compare where your lender stands. Keep in mind that though the lender may have advertised an extremely low rate, your credit might negatively affect you and force you to pay a higher one.

Can I set up a way to lock in my interest rate?

The best scenario involves locking in at the lowest rate possible. The paradox comes that with rates fluctuating so frequently it is hard to do. One option involves getting an Adjustable Rate Mortgage and later locking in as soon as you find the lowest rate, but that also means you would have to pay a higher rate for the time being.

Another downside to this would be signing up with lenders that require you stay in a variable rate contract for a certain period of time. You definitely want to ask how long the period of time you need to stay in the variable rate portion lasts. The best interest rate to hope for is somewhere around 6 to 7 percent, although they can vary.

What are closing costs can I expect?


This question is especially important when you don't have a lot of money to spend during the mortgage process. If you can determine the amount of the closing costs now, you can add these onto your loan to help you move the purchase along.

Will I be penalized if I pay my loan off more quickly?

If you pay off your loan over a lesser amount of time, the lender loses money on the interest they would be making off of you. To offset this lenders often charge a penalty fee for paying off your loan early. Ask to see if there is a fee like this and see how much that fee would be.

What down payment is necessary?

Most of the time at closing a 10 to 20 percent down payment on the mortgage is required. Lately it has been more common to see that down payment worked into the mortgage itself so no money is required at closing.

Inquiring about the down payment is one of the most necessary parts of obtaining a mortgage because you need to ensure you have enough to initially obtain the mortgage.

How many origination and discount points will I be responsible for?

Points are a very confusing and difficult subject to understand, but they can mean the difference between a high monthly payment and additional closing costs or a low monthly payment and no closing costs. Read up on the subject of mortgage points before heading into your lender and inquire about the different options you have.

How long will the loan process take?


Various lenders take various amounts of time to complete the mortgage process, some can be very quick, and some can take a very long time to confirm everything. Ask in advance how long the process will take so you can move to another lender if you have a particular home in mind that you don’t want to risk losing to another buyer.

What might delay my loan or the approval of the loan?

Ahead of time ask about any potential problems or setbacks during the loan process so that you can correct any foreseen problems ahead of time to avoid deterring obtaining your loan quickly.

What do I need in order to qualify for this loan?

This question should be asked ahead of time so you have the ability to get everything in order, including your credit. Ask the lender to be very specific so when you come in everything can go smoothly and according to plan.

What documents will I have to have available?

Although you may not be great at keeping your important documents filed and easily found, you can get a jump on locating them if you ask ahead of time what you need. Find out well in advance so that nothing hinders the process.

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