Do you know the right questions to ask your mortgage lender?
Before you start looking at homes, it's wise to geet your selection of lenders squared away first. Part of being prepared to get a laon is asking your mortgage company the right questions.
When you start looking for a lender to help you buy a home, it's normal to feel like it's a one-way street. You need the money, so anyone who will offer it to you seems like someone you should listen to.
When you're buying your first home, everything may seem foreign to you. In reality you are an essential customer for your lender. Your business is critical to the company. It's how they make their money and stay in business. So it's worth stepping back for a moment to orient yourself correctly.
As with anny business deal, you need to look out for your best interests and act with confidence. Understanding how to pick a lender is a critical element in shopping for a home.
The terms and conditions you get on your mortgage will be in your financial picture for years to come, so it's important to shop around for a lender that will fit your needs. They may question you-- but you are also interviewing them.
One of the most important questions you will ask your loan officer or mortgage broker is what documents they require. If the mortgage officer is experienced and trustworthy, they should tell you before you ven ask
Depding on the loan program you end up with, you'll more than likely need these things to grant a mortgage preapproval.
Watch out for loan officers who start peppering you with options before listening to your story. Different types of loans make sense for different types of borrowers. Give the lender your financial picture and have the loan officer explain a breakdown of what options are available now and how they would or would not meet you needs.
There are tons or mortgage programs for buyers. Not every mortgage option is going to be suitable for your specific financial situation. Should you opt for an FHA loan? Does a convential mortgage make the most sense? Are you a vereran? Quite often, buyers will ask if they should go with an FHA loan or a conventional mortgage.
An exceptional mortgage broker will go over in detail which loan programs make the most sense for you and why. Getting the best mortgage terms for you needs will come down to asking thelender the right questions. The mortgage officer should then have the ability to plug in the best package for you.
Buyers who rush into getting a loan can find themselves stuck with bad financing terms.
You will find a wide variety of lenders out there, some with more capabilities than others. The loan officer is the person you interact with, but others will be involved, like the mortgage underwriter who will actually determine whether or not you get the loan. A company that approves loans in-house will be betterequipped to adapt to potential hurdles in your mortgae. For example: if there is a problem in your credit report, an in-house underwriter could discuss it with the loan officer and get it ironed out. An out-of-house underwriter might deny the loan and move on with the next application.
The standard 20% down payment is still desired by lenders, but that does not mean it is required to get a mortgage. In fact, far from it. The need for a twenty percent down payment is a myth that has traveled far and wide for years.
Some lenders will work with you even if you have as litle as 3% down. There are in face three percent down conventional mortgages available now. With specific specialized loan programs like FHA or VA loans , you can also get a loan with 0-3% down. These aremore typical for first time home-buyers.
Whatever the circumstances you need to know the requirements for getting the loan before moving forward. Keep in mind that if you have 20% to put down, it might be wise to do so. By having a 20% down payment, you will avoid paying private mortgage insurance which will add to your monthly mortgage expense.
Another smart question to ask a lender is if there are any special mortgage programs available that could be beneficial to your situation. There are aproximately 2500 specialized programs around the country that help buyers get a home. That's a lot of options and most probably will not apply to you. An outstanding lender will have the knowledge necessary to guide you to programs that for your situation. If the one you are talking to has no information or seems to have little interest in helping you in this area, find another lender. Like any other business, there are going to be good and bad eggs. If the morgage officer is more concerned about closing the deal, then you know you're in the wrong place.
The origination fee is an expense charged by most lenders for seting up a loan. The lender you are dealing with may or may not have a fee. If they do, this expense may vary lender to lender. You may be able to negoiate on the origination fee. It never hurts to ask!
Aagain it is vital to keep in mind the total cost of the loan. If one lender has an origination fee higher than another, that should not preclude you from choosing them. It is all about the total financial output on your part.
The interest rate you are charged on the loan is a significant factor you need to consider when picking a lender. You also need to pay attention to what the APR or annual percentage rate will be. The APR adds up the lender fees and the interest rate and divides them by the term of your mortgage.
When we are uncertain about interest rates, the rate lock can become a vital decision point in the loan. Many borrowers will want to have the comfort of locking their interest rate.
These are the questions you should be asking regarding rate locks:
A pre-approval letter can make you more competitive when trying to buy a home in a hot market.
Once a buyer sees that you have pre-approval, it makes the deal more likely to go through. Pre-approval is not a guarantee, but it is a big step in the process.
Keep in mind that pre-qualification is not the same as pre-approval. Pre-approval is harder to get but is much more reliable than pre-qualification.
With a mortgage pre-approval, a lender will verify your income, employment, and credit. With many lenders, a pre-qualification does none of these things.
If you are purchasing a home, the seller and listing agent will want a pre-approval letter. A pre-qualification is worthless.
The loan officer is one of the best-qualified people to ask about the likelihood of getting the loan you are after. He or she can give you informed advice on what to do to get the loan and should be able to look closely at your circumstances to tell you whether or not you are likely to be approved.
If you have a steady job, good credit, and an income that doesn’t fluctuate, a lender should be able to give you confidence getting the mortgage won’t be a problem.
Asking is essential because if you are told no, you need to make some changes before buying a home.