Buying a house or refinancing your home mortgage is never an easy task. This is because the process is not only tedious, it may also be one of the largest transactions you will handle all your life.
Getting a mortgage lender that matches your requirements can be a daunting task. This explains why many people settle for the first one they meet. However, you shopping around for a mortgage lender can prove beneficial.
Here are 5 questions you should ask your mortgage lender when meeting for the first time.
1. How Much Do I Qualify For?
Knowing how much you prequalify for will help you get to know the budget you will be working with when looking for a house. The mortgage lender should give you a letter showing how much you qualify for. This is after you’ve completed an application form.
A mortgage lender may look at a few things before they can come up with a figure. Your current income, any pre-existing loans, your credit score, and recurring debt like credit card debts are some of the things used to determine the prequalified approval.
It is important to note that the prequalification letter is not an approval or commitment letter.
2. How Much Do I Have to Pay as a Down Payment and What Are Your Interest Rates?
The amount you put as down payment may affect the monthly rate, interest rates, and terms of the mortgage lender.
Know the minimum required down payment you can pay for your loan and ask if you can qualify for any assistance programs.
Don’t forget to ask for a direct interest rate quote and whether it will be adjustable or fixed. If it will be adjustable ask how often it will adjust, highest rate, index, margin and maximum annual adjustment.
3. Do You Charge Any Additional Fees?
The APR (Annual Percentage Rate) is included in the lender’s fees with other additional costs like the appraisal, recording fees, taxes and lender’s title policy.
These are just some of the additional costs you must make sure to ask about. These charges will help you compare different mortgage lenders and help you make a better choice.
Your mortgage lender is required by law to give you the loan estimate. A loan estimate is the total sum of all these fees.
4. When Do I Close?
Get to know when you will get to close your mortgage loan. Some of the things that may determine when you will close are out of your control.
However, your mortgage lender should give you a rough estimate of your closing date so you can know the time you are dealing with.
5. What Are Some of the Things That Could Delay the Mortgage Closing and How Can I Avoid Them?
While some delays are normal and unavoidable, there are a few things you can do on your part to avoid delay. Do not apply for other large financings while in the middle of the mortgage as this could negatively affect your credit score.
Try and avoid making large deposits, large deposits have to be sourced and this could cause delays.
The Right Mortgage Lender Will Make Your Home Purchase Process a Smooth One
When you are done shopping for a mortgage lender and you are ready to make a choice, ensure that you give them all the required documents and information needed. Hoarding important details will delay the process more than it should.
In addition, maintain good communication with your mortgage lender to know of any arising issues or the progress made.
You can read more on what to do when buying a house through a mortgage loan on our blog post.