If you’re in the market for a new house, then you know how critical it is to keep your finances in order. When you reach out to a mortgage lender, you’ll want to be prepared with the right questions so you’ll know what you’re doing with your money. After all, a house is a big expense — and you deserve to get the best rates and treatment possible!
Where should you start? Keep reading to learn 5 important questions to ask your mortgage lender!
1. What Will Interest Rates Look Like?
When you’re looking to secure a mortgage, finding out the interest rate should be a priority. Since there are several things that will impact the interest rate quoted to you, a good mortgage lender should walk you through the process. And not all mortgage lenders will offer you the same interest rate, so it’s good to do your homework and obtain quotes from lenders.
Your credit score, loan type, and location are among the primary factors that will determine what your rate is. As you work through the process, ask your mortgage lender whether a fixed or adjustable rate is the better option given your circumstances.
Important questions like this one will help you plan your expenses more easily. And you’ll be able to determine how much of your monthly paycheck will go toward a new home.
2. Can You Explain the Types of Mortgages Available to Me?
Are you intimidated by the thought of putting down 20% to purchase a house? The good news is that not all loan types stipulate that you put down a big chunk of money first. And many loans can accommodate people with lower credit scores or incomes.
Ask your lender about the different types of loans available to you. Conventional loans will require a higher credit score and generally ask for a higher down payment. And you may not need to borrow as much money upfront since you’ll want to put down a higher percentage of the home cost initially.
If you’re part of the military, you may want to look into a VA loan. You won’t need to make a big down payment and you could see lower closing costs. Ask your lender what to expect with this type of loan.
And if you’re really concerned about making a big down payment, look into an FHA loan. Even if your credit score and savings are on the lower side, you can still secure a home. Ultimately, you’ll notice that different types of loans will have different interest rates — so talk to your mortgage lender about which option is right for you.
3. Important Questions Include Asking About Fees
When you start working with a mortgage lender, make a point of asking what fees are associated with the process. And do this early on. You’re all but guaranteed that there may be some additional costs to account for in your budgeting.
Closing costs are one of the most common fees you’ll face. These include a number of different fees such as the cost of a home inspection, broker fee, attorney fee, and application costs. You’ll also pay an origination fee, which covers the processing of the actual mortgage.
As part of your closing costs, you may need to spend money on an appraisal, too. This is a critical step in the process when you’re pursuing a mortgage since you need to know the final value of the house. When you’re buying a house, expect to set aside several thousands of dollars or more to cover fees to close the deal.
4. What Can I Afford?
When you’re determining what to ask your lender, you should ask how much house you can afford. This is the key question that will help you narrow your choices to those that are within your budget. Make this question one that you ask early in the process.
Your lender will look at your credit score and the debts that you have to your name. They’ll also evaluate your assets to determine how much you can afford for a down payment. If a 20% down payment is not feasible, your mortgage lender should work with you to find another path to homeownership that won’t burden your finances.
Remember that you can spend less than the amount your mortgage lender quotes you. If you have any concerns about job stability or financial issues, it’s better to keep a home price in your comfort zone.
5. Ask What the Timeframe Looks Like
Are you in a hurry to move into a new place? Before you dive into the mortgage process, it’s a good practice to ask your lender what the overall timeframe for securing a mortgage — and ultimately a house — will look like.
If the housing market in your area is hot, you may be competing with other buyers for your dream home. And you’ll need to be assured that the process will move quickly to make an offer and close.
When a lender quotes you a mortgage rate, it may only be good for 30 days. Check with your lender to understand how long the rate quote will be locked. A closing process that goes beyond that time frame could impact what you end up paying.
Get the Loan You Deserve
Spend time writing down important questions that you would like to ask your mortgage lender. By asking questions, you won’t look naive — you’ll show that you’re prepared. And you’ll stand a better chance of getting a loan that fits your budget and lifestyle.
To get the honest mortgage assistance you need, contact us and we can help!