Realtor Josselyn Gross
Questions You SHOULD ask your Mortgage Lender
1. What is the interest rate?
This is the first thing you should ask your lender. Ask for a direct interest rate quote as well as the corresponding annual percentage rate (APR). The APR accounts for fees and other loan related charges, so it's important and it gives you an equal comparison among different lenders.
2. How many points does that include?
A point is a fee paid to the lender at closing in exchange for a reduced interest rate. (1 point = 1% of your total mortgage amount). Make sure that you understand how many points are included in the quoted interest rate. Also, ask what the benefits are of buying more or fewer points.
3. How much money do I need to put down?
It's usually best to put at least 20% down for the best possible rate and terms, but there are other programs out there. If you don't have 20% down, there is a good chance that a monthly PMI (private mortgage insurance) payment will be added into your payment. Your down payment will affect other components as well, such as your rate, terms, and monthly payments. Your lender should be able to help you weigh the pros and cons to help determine what's right for you.
4. When can I lock down the interest rate?
Interest rates fluctuate so locking in a low interest rate could pay off. Ask your lender when you can lock down your rate. Lenders will usually offer lower interest rates for shorter term locks than long term locks.
5. What are my estimated closing costs?
Closing costs include loan-origination fees, appraisal fees, and attorney fees (if applicable). Ask your lender to estimate what your closing costs will be so you can plan accordingly, and ask for a detailed list of all the costs and fees you might encounter.
6. Are there any other costs or fees?
This one is self explanatory.
7. What's the difference between fixed- rate and adjustable- rate?
A fixed-rate mortgage keeps the same interest rate for the life of the loan. An adjustable interest rate changes based on the market. Discuss with your lender to determine which is right for you.
8. Are there any special requirements that I should be aware of?
There are several different guidelines for homebuyers applying for a mortgage. Typical requirements relate to income level vs. debt, employment status, and credit history. But if you're a military veteran or first time home buyer, you may be eligible for special government mortgage programs. There are so many programs available today, VA, FHA, RD, etc. and each program can have different requirements, so ask your lender what special requirements your loan has.
9. Can you estimate when the closing will be?
Each loan program has different regulations and timelines. There are a lot of factors that help determine when you closing will take place. But your lender may be able to at least give you a ball park of when you can expect to close.
10. Is there anything that could cause a delay?
This one is huge! What might seem like a small detail can crush a deal. The best way to avoid delays in your closing is to stay in touch with your lender and always provide the most up to date and accurate documentation possible. When the underwriter asks for something, consider it urgent!
We have several great lenders that we work with, so if you are considering buying a home, please contact me today and I can help you get started.