Sitting down with a mortgage lender can be a stressful event. But it doesn’t have to be. Don’t be afraid to ask questions even as you are giving details about your financial lives.
Asking the right questions gets you invested in the process, helps you learn more about the mortgage industry, and gives you valuable information that could help you secure a better home loan. Here are a few key questions to ask your lender.
What’s the Interest Rate?
Your interest rate is going to be determined by factors like your credit score. As a result, it can vary widely. Make sure to ask about the interest rate, and also about the interest rate vs. the annual percentage rate (APR).
How Can I Qualify For A Loan?
Lenders look at a lot of factors before approving someone for a loan. They will investigate elements like your credit score, current savings, debt, income, and other details about your financial history. If you are curious about your qualification standings, getting pre-approved is usually a good way to see for yourself.
What Are Some Of The Mortgage Fees and Payments?
Once you are all ready to secure a loan, you will be expected to pay some fees. For each fee (points) you are willing to pay, the interest rate will be slashed by 1%. Consequently, if you choose (and your lender agrees) to not pay closing fees, the rate of interest will be higher. It’s important to get an understanding about these one-time-fees before reaching the end of the process.
Additionally, you could have to pay mortgage insurance if you put down less than 20%. All of these fees and payments will come in addition to your monthly mortgage payment. Make sure to ask about the payments so you can see if you can actually afford it on top of the other routine costs of homeownership.
What Is The Minimum Down Payment I Can Pay?
Asking about the down payment is probably one of the most important questions in the entire lending process. It’s obviously better if you can put down a larger payment, but it can also be very hard to save up that amount of cash. The usually down payment for a normal loan is 20% of the sale price of the home. But some loans, like an FHA, permit you to just put down as little as 3.5%.
Click here to learn the difference between pre-approval and pre-qualification!
What About The Mortgage Rate? Fixed Or Adjustable?
Another good question to ask in the lending process concerns the actual mechanics of the mortgage. A fixed rate mortgage means the interest rate is the same throughout the loan, while an adjustable-rate changes at regular times.
A lot of people choose to go the fixed-rate route, but people who want to stay in their homes for a short amount of time might find it more advantageous to go with the adjustable one. Make sure to ask and see which one your mortgage is, and especially ask to see when the interest rate will change if it is an adjustable one.
Asking these types of questions throughout the lending process will help you get a better idea about your mortgage and let your lender discuss different options with you.
Do you have a mortgage question? Call the Reed Team today at 949-392-6400!