Securing a mortgage loan is an essential piece of purchasing your home. Most borrowers only get a mortgage loan once or twice in their life. Because it is such an infrequent, but important transaction you need to understand exactly what you are getting yourself into.
Here is a list of eight essential questions you should as your mortgage lender.
1. What is the best loan program for me based on my current financial situation and that will help me reach my financial goals?
There are so many loan programs out there it is important your lender knows and understands what you want out of your loan. Be sure you are completely comfortable with the loan your lender is trying to set you up with.
2. What are the total costs associated with your loan?
There are discount and origination points you might have to pay. Some lenders charge prepaid mortgage interest points to lower your interest rate or change other points or fees that do not benefit you at all. Ask to see a breakdown of the fees and charges associated with your loan.
3. What documents will I have to provide? How soon does the lender need them to avoid delays?
Often times, the lender will require documentation that is not at your fingertips or that might take time to get. Knowing what documents are needed ahead of time can really reduce your stress level and will ensure that your loan approval and funding goes smooth.
4. How soon can I lock my interest rate? Does it cost anything to lock?
Mortgage loan rates can fluctuate from the time you start the loan process until you close. To insure you get the rate you are expecting, you will want to ask your lender to lock. Before you pick your lender, you will want to find out if they charge a loan lock fee. This way you will not be surprised if your lenders charges you.
5. Does my loan have a prepayment penalty?
This means that if you want to pay off your loan early, the lender might charge you for doing so. It is important to find out the duration of any prepayment penalty before you move forward with the loan.
6. What is the minimum down payment amount for my loan?
Down payments typically range from 3% to 20% of the purchase price. The amount you put down will determine your principal and interest payment. Be sure to discuss these options with your mortgage lender.
7. What are the qualifying guidelines for the loan?
These are requirements related to your income, employment, assets, liabilities, and your credit history. There are several different loan types and many of these have different requirements. Some require a large down payment and other might require mortgage insurance. Once you know what loans you qualify for you will be able to choose the loan that best meets you financials goals and objectives.
8. What are other people getting as loans for their for sale by owner homes?
Doing your research is a great way to be updated and aware of the normal rate and the total costs associated with the loan.
You should ask these questions to a couple different lenders and once you find a lender you are comfortable with, you can proceed.