Which Mortgage Is Best For You?

There are a few things to consider before taking out a mortgage. Mortgage questions you have to ask. Choosing the wrong lender or mortgage can impact your finances for years to come, so choose carefully.

But what’s the right question to ask your lender?

If you ask the questions outlined below and don’t like the answers, you can move on to another lender.

Let’s take a look at some of the questions you should ask.

Lenders and brokers need to know some information about you and your finances in order to find the best loan for you. , should mean that their recommendations are more appropriate.

Questions to ask your mortgage broker include explaining the pros and cons of various loan options.you can choose fixed or floating rate mortgages Interest only or negative amortization loans.

These different types of loans are suitable for borrowers in different situations, so you should have a clear plan.

What is the interest rate and APR of the loan?

Annual Percentage Rate (APR) is the interest rate plus any other charges added by the lender divided by the repayment period. However, there is no standard way to calculate APR and different brokers may have different APRs for him.

Also, if you take out a variable rate mortgage, you can’t accurately calculate the APR. APR is also wrong if you pay off your mortgage sooner. Also, for variable rate loans, you need to know how often the interest rate is adjusted and the maximum annual adjustment amount.

Do they offer an interest rate lock?

Interest rates change daily. Locking interest rates can save you cash if you expect interest rates to rise. The lender may charge him 1% to lock in the interest rate, but there are a few questions to ask the lender before doing this.

They may charge a fee to arrange this. You need to know if all your expenses are protected. You will want to know how long it will last and you will need this in writing.

Ask about discount points

An alternative to interest rate locking is to purchase discount points. Discount points cost 1% of the value of the loan and reduce the interest rate on the loan. The more points you buy, the less interest you pay, which is also tax deductible.

Paying points makes the most sense when you know you’ll be home for a while.

How much down payment do you need to save?

The target was 20% of the purchase price, lower down payment generally acceptable. A 3% down payment is available on some loans, but there are some downsides to having a lower down payment.

Private mortgage insurance must be paid up to 20% equity on the home. Better interest rates and terms are generally offered to borrowers at 20% down.

What are the best rate credit score requirements?

Is there a minimum credit score required to ensure the best mortgage terms? If so, what is it?Would you recommend working on improve credit score Before applying for a loan?

How much does the loan cost?

Once your mortgage is approved, you will need to pay lender fees and other costs. This includes origination, evaluation, inspection, recording fees, taxes, and escrow fees. The lender will provide a loan quote detailing these charges. These costs vary by lender.

Are there repayment penalties?

If you pay off your loan early, the lender may require you to pay six months of additional interest. However, this practice is outlawed in some states, but you should check the circumstances in your case.

Are loan approvals done in-house?

The process is quicker if the lender completes the underwriting themselves. FHA and VA loans are submitted for approval by these government agencies, so approvals often take time.

How long does it take to fund a loan?

Loans may take 40 days or more to be funded after final approval.the date of close the house This must be coordinated with the lender as it must be included in the purchase agreement. You should also check if any possible issues could slow down the process.

Is there a guarantee on closing?

Several problems arise when the lender does not close the transaction to fund the purchase as expected. If I need to pay additional costs, will the lender guarantee a closing date?

final thoughts

It is imperative that you answer all your mortgage questions up front before you sign a contract with a mortgage lender. Get satisfactory answers and choose the lender that best suits your needs.

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