Buying a home can be overwhelming since you probably have a ton of questions floating around in your head. What loan should I sign up for? When will the loan close? To help ease the anxiety of buying a home, here are 5 questions to ask a mortgage lender to help steer you in the right direction.
5 Questions to Ask a Mortgage Lender
What loans are available to me?
Not everyone qualifies for every type of loan. And on the flip side, you may qualify for more types of loans than you thought, so it’s important to ask your lender which loans are available to you. By asking questions, you’re able to not only talk through the options that are available to you but also which ones are best suited for you. Just because you qualify for a certain loan, doesn’t mean it’s the best choice for you and your family.
What will be my interest rate?
With different types of loans come different interest rates. For example, an adjustable rate mortgage tends to have a lower interest rate than a FHA mortgage. Along with asking your lender about your interest rate, it’s good to ask what you can do to lower your rate. These actions may include paying a higher down payment, buying points, or going with a different mortgage type.
What costs are associated with the loan?
Every mortgage type comes with associated costs. These costs can include appraisals, inspections, title fees, escrow fees, taxes, etc. If you’re looking to keep your cash, and pay a higher monthly payment, perhaps going with a loan with lower associated costs up front would better suit you. Additionally, if your lender does say it’s beneficial to buy mortgage points, it’s good for you to know those fees before you select the loan.
Is there a penalty for pre-payment?
If you’ve had a great year at work and received a nice bonus check, you might be thinking of putting those funds toward your house investment. But, it’s important to check with your lender to make sure you don’t have any pre-payment penalties. The type of loan you selected might come with automatic pre-payment penalties, so it’s good to confirm before you make a poor financial decision.
How long will it take to close on the loan?
The amount of time it takes to fund the loan is information you need to know so you can properly plan to move out of your current home. If you plan to buy your new home contingent selling your current home, the loan timeline is essential. Additionally, not securing funding by the closing date can cause serious problems especially if you have agreed to end your lease a certain month but now have to find a last minute place to live/store your items. Considering the weight of this question, asking about the closing date is one of the most important questions to ask a mortgage lender.
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