What Questions To Ask Mortgage Lenders
Obtaining a mortgage loan isn’t necessarily a breezy process. For that reason, you should have a list of questions at hand to give you a head start when you enter the lender’s office. Here are the top 7 questions you should always ask your mortgage lender.
1. Which Kind Of Mortgage Fits My Situation Best?
This is the type of question you should be asking before any purchase in life. Having a good understanding of how a mortgage correlates to you as an individual is extremely important. By asking this question, you should be able to unravel the advantages and disadvantages of a mortgage under your circumstances. From adjustable-rate loans to interest-only loans, there are many factors to put into consideration.
2. What Are My Rates?
In this instance, you’ll want to consider your annual percentage rate (APR) to start. Your APR includes your interest rate, as well as a list of other lender’s fees over the term length. Be careful though, as some lenders won’t give you an accurate APR. If you’re interested to see how you can calculate your own, check out this link here.
3. How Much Money Can I Borrow?
This may seem like a no-brainer, but getting the numbers right off the bat can provide peace of mind and help to narrow your options. A lender will take into consideration your income, employment, debt, credit history, and a number of other factors when deciding. You should also ask if you are able to prequalify for a loan.
4. What Is My Down Payment?
Typically, you should expect to pay a 20% down payment, as that is the minimum for most mortgage lenders. If you’re qualified, however, it is possible to start off with lower down payments. You’ll want to be careful though, as a lower down payment with added interest will just cost you more over time. Talk to your lender about your different options.
5. What Are My Initial Costs?
When you see a lender, you have to have money prepared for the lender fees. Alongside those fees, you must also have money for third-party fees. These types of fees include appraisals, credit reports, title policy, etc. Your lender is required by law to give you a loan estimate with all of these fees included, though asking ahead of time will give you a better idea of your overall costs before you get too deep.
6. When Are You Performing The Hard Credit Check?
To give you an interest rate quote, a lender must perform what is referred to as a hard credit check. If you are going around to different lenders to see your options, you’ll want to make sure that these hard credit checks are all made within small windows of time. The reason being is that hard credit checks can lower your credit score by a few points and make a negative impact for when you see the next lender.
7. What Is My Monthly Payment?
This is easily one of the most important questions, as you’ll need to know what you have to pay monthly. Though there are monthly mortgage calculators available such as this one, we recommend getting the correct information firsthand.
Getting a mortgage loan doesn’t have to be scary. It is a matter of knowing the right questions to ask so that you can make the most out of your lender meeting.
Do you have experience dealing with mortgage lenders and want to share? Let us know in the comments!