Buying a house is exciting and complicated at the same time. Understanding the process is a good first step before starting the journey. I put together these steps that will, hopefully,
Top 10 Questions you MUST ask Your Lender or Mortgage Broker
Dated: May 17 2021
Before I start with the list, let me answer the question, "What does a mortgage broker do?" A mortgage broker can help you connect with potential lenders and assist you to seek out and get you the best deals possible. They explain the rates of different mortgages and will guide you in deciding which mortgage is the best fit for your situation. Always keep in mind that the more your broker knows, the better assistance, advice, and accurate information they can provide you with.
So, what are the questions you must ask your Mortgage broker?
What type of loan is best for me?
Like a surgeon before performing surgery, he assesses your medical situation. A broker does the same thing. He gathers your information before recommending what particular type of loan you should get. Ask your Lender to explain thoroughly your options, the pros and cons of adjustable-rate loans, fixed-rate loans, interest-only loans, and negative amortization loans. Check how each of them would fit your circumstances.
How does the approval of a Mortgage process work?
Once you have accepted an offer, you and your mortgage broker will work together to decide when the lender will submit your mortgage application. Once submitted, it will take two to three business days for you to receive your initial approval only then can you complete all the paperwork to secure the mortgage rate and term.
Is 20% the usual down payment?
Typically, 20% is the downpayment lenders prefer but it isn't required. If your reports come in strong, you may even get approved a downpayment of as low as 3% or none at all. Your chosen lender will talk to you about all your options.
What is my overall interest rate?
This is one of the most common and important questions to ask. It's the benchmark we all need to understand. Lenders can move the needle of your mortgage interest rate in numerous ways, and in most cases, it requires additional fees. After you talk to several lenders, you will get an idea of the ballpark interest rate you qualify in.
Do I have to sign the paperwork face to face?
Signing your paperwork digitally is a faster process. It is especially better now because of COVID. Another key point is that you’ll be better informed every step of the way.
Will you charge for an interest rate lock?
When you decide on a lender, at some point you may want to lock in your interest rate. This will ensure that the interest rate doesn’t go up which could hurt your pocket. Bear in mind that this will also keep it from going down. If it’s about a typical home loan, then there will be no charge for an interest rate lock unless it's a construction loan.
Will the mortgage allow prepayment?
Lenders will allow you to prepay your mortgage. You just have to know that in California, lenders will charge you prepayment penalties. This usually applies to the first five years of your mortgage.
How long will it take until my loan closes?
Knowing when your target closing and moving-in date helps you in making preparations in advance. It will also help you avoid any additional costs.
How frequently will I be updated on my loan’s progress?
Establishing what your service expectations are upfront and seeing how much effort the lender puts in to meet those expectations will help you gauge different.
Are there other fees that I need to know about?
You will be given a loan estimate by your chosen mortgage broker. It should include the lender's fee and all other third-party vendor fees that are related to the mortgage. To enumerate, you should see the following:
Escrow - recording fees and taxes
There are no wrong or right questions when you talk to a lender. Ask everything you aren't sure about. It is best to cover all bases rather than worry about it down the road.
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Before I start with the list, let me answer the question, "What does a mortgage broker do?" A mortgage broker can help you connect with potential lenders and assist you to seek out and get you