Questions To Ask Your Lender
There’s a lot to consider when you buy or refinance a home. From loan types to mortgage rates, points, and closing costs — it can be tough to keep everything straight. Doing your research and asking questions is important when looking for a mortgage lender. Not all lenders are the same, and it’s important to understand as much as possible before you move forward in the home loan process.
1) WHAT TYPE OF MORTGAGE LOANS DO YOU OFFER?
There are so many different loan types; conventional, portfolio, government backed (VA, FHA, etc), fixed rate, adjustable rate and so many more. All have different requirements and qualifications. Talking to a couple different lenders will help you find the right one for YOU.
2) DO YOU CHARGE AN APPLICATION FEE, CREDIT REPORT FEE, OR ANY UP FRONT FEES?
Some lenders charge application fees. Application fees are meant to cover the cost of processing your request for a new loan and typically include costs such as credit checks and administrative expenses.
3) WHAT IS YOUR AVERAGE LOAN PROCESSING TIME?
Closing times can vary quite a lot depending on how busy a lender is at the time you apply- here is why that matters. Firstly, offers with shorter closing times are more desirable in a competitive market. Second, If the pre approval is valid for 30 days, but it takes you 60 days to find a house, they will have to run your credit again.
4) DO YOU KNOW OF ANY DOWN PAYMENT ASSISTANCE PROGRAMS I CAN QUALIFY FOR?
Some lenders may have access to certain down payment assistance programs that others may not. If you need DPA, be sure to research the options that are available in your area. Then, ask your lender about the programs they work with and whether or not you qualify.
5) DO YOU CHARGE FOR A RATE LOCK?
A mortgage rate lock is an agreement between you and your lender that the interest rate will stay the same until closing, regardless of market fluctuations. In many cases, they will also float the rate down if the market rates drop under your rate lock. It is important to ask!
6) WILL I BE REQUIRED TO PAY A RATE LOCK EXTENSION FEE?
Rate locks for a traditional 30-year mortgage are typically good for 30 or 45 days, though some lenders will go up to 60 days. Extension fees can be as high as 1% of your total loan amount, you’ll want to understand this before you sign anything!
7) DO YOU HAVE ANY MORTGAGE OPTIONS WHERE I CAN AVOID PAYING PMI?
Mortgage insurance (PMI) is meant to protect the lender in case of borrower default. It’s required on most loans where the homebuyer puts less than 20% down. It often costs a couple hundred dollars per month on top of your mortgage bill.
8) WHAT ARE THE ORIGINATION FEES?
An origination fee provides additional profit for the lender beyond what’s built into the interest rate. A good follow-up question: What are all of your lender fees? Be sure to specify "lender fees." They’ll know what you mean because there are also additional costs, which you'll ask about next.
9) WHAT OTHER COSTS WILL I PAY AT CLOSING?
Fees charged by third parties, such as for an appraisal, a title search, property taxes and other closing costs, are paid at the loan signing. These costs will be detailed in your official Loan Estimate document and your almost-time-to-sign Closing Disclosure. But the sooner you know what they are, the better you can shop, compare — and prepare — for them.
10) WHAT WILL MY INTEREST RATE AND APR BE?
When lenders advertise interest rates, there are two rates you’ll see. The first is the base interest rate you’re getting charged for the mortgage.The second interest rate is the annual percentage rate (APR). The APR is higher because it factors in the base interest rate plus the closing costs associated with the loan.
11) WHAT DO I NEED TO BRING TO THE CLOSING TABLE?
In order to close without delays, make sure you have everything you need to bring to the closing table.
Have any additional questions? Contact Us!
