The process of purchasing a home is as intricate as it is challenging. There are a myriad of areas to research, in addition to figuring out who you should speak to. When it comes to the area of taking out a mortgage, you’ll have to do some extra investigation. Generally speaking, a mortgage lender will tend to your specific requests.
These mortgage lenders are knowledgeable professionals, and they will provide you with all the information you need to make sound decisions. Taking out a loan is a big investment on your part, so you’ll want to be as informed as possible. This starts by asking the mortgage lender relevant questions that will help you make a sound decision.
Here are seven important questions to ask a mortgage lender:
1. Ask about mortgage down payments
One of the most important questions to ask a mortgage lender is the topic of down payments. Typically, your mortgage lender will give you a standard percentage, if nothing else is specified. This standard percentage usually comes down to twenty per cent, per your circumstances. If this is not possible, you’ll have to determine what is.
Ask your mortgage lender what your options are, surrounding the amount to be paid towards the down payment. If you can’t afford to pay less than twenty per cent, you may have to resort to private mortgage insurance. All of these options should be disclosed to you, in the meeting with your lender.
2. Ask about mortgage pre-approval
As it pertains to the actual mortgage, you should be informed on whether or not you can get pre-approved. This means that that a lender can tell you about the maximum you could spend on a property. Financing may or may not be included in this scenario, so you’ll always want to ask your lender about this aspect.
3. Ask about interest rates
Interest rates are, generally speaking, one of the most wide-ranging aspects of mortgages. That is because each property will have a different, unique rate of interest. As soon as you get into an initial meeting with your lender, ask them about how interest rates will be applied. The subject of annual percentage rates will typically be brought up.
APR’s refer to the interest rate, applicable to your mortgage, for an entire year. As such, it is important to research your options with your potential lender. If you find one that isn’t to your liking, there will always be a friendly option available. Don’t be afraid to negotiate as well, if need be.
4. Ask about fixed & adjustable mortgage rates
Mortgage rates can be broken down into two categories. If your mortgage has a fixed-rate, that means you will keep the same interest rate for the life of the loan. This entails that you could have the same rate of interest, typically, for fifteen or thirty years. On the other hand, there may be an adjustable rate available as well.
This type of mortgage refers to interest rates that are based on how the market changes. Sometimes, the market may be volatile, affecting the cost of your interest rate. At other times, it may be steady, lowering your interest rate in essence. Ask your lender about these variations, and which may be more friendly for your situation.
5. Ask about a loan rate lock
It is commonly known that interest rates are always fluctuating. Take a look at your specific circumstances. Once you have found an interest rate that you can work with, talk to your lender. They should tell you when it will be possible to lock in your rate, as well as for how long.
Locking in an interest rate can usually come in the form of two offers by your lender. A lower interest rate, with a short-term lock, can be granted. On the other hand, you may be given the option of having a higher interest rate, with a longer-term lock. Don’t be afraid to weigh your options, when discussing it with a lender.
6. Ask about closing fees
Closing costs are also incredibly important, and you should be well informed about them. As it relates to the mortgage in question, there could be a number of charges applicable to you. For example, loan origination fees, in addition to appraisal fees, may add to your bill. You’ll also want to consider the services of your legal representative, if applicable.
7. Ask about miscellaneous costs
Your lender, or potential lender, should inform you about all applicable charges upfront. However, it is in your best interest to ask them about any other charges that may pop up in the future. Unexpected expenses are bound to occur; you’ll want to be as prepared as much as possible.
Since there are a ton of stages and requirements in the home purchasing process, questions are important. Asking your mortgage lender about what you should expect, therefore, is vital. Stay in touch with them throughout the process, so you can stay abreast of all components!
