With so many different types of loans, it’s likely that you have a lot of questions for your mortgage lender. You need to ask any questions you have before you commit to the loan.
Questions can range from the right type of loan for you to how many years you will be required to pay. You should be shopping for a lender and asking questions until you get answers you are comfortable with.
Which of the Different Types of Loans Is Right for You?
Reputable lenders will want to find out more about you before giving you information about what loan is right for you. Don’t choose a lender that isn’t gathering information from you before they recommend a type of loan. Ask a lender to explain the pros and cons of the types of loans and learn how each one will fit into your personal circumstances.
What Is the Interest Rate and Annual Percentage Rate?
The APR is calculated with a complex formula that includes the interest rate and other related lender fees in the loan’s terms. An APR won’t account for early payoffs.
How Much of a Down Payment Is Required?
The most common down payment is 20% but that may not be the only requirement, especially if you are qualified. Depending on the loan you choose, you may be able to get away with as little as 3%. There will be pros and cons to this so it’s best that you get all the information and your options.
What Are the Origination Fees?
Lenders will sometimes charge origination fees. These fees are a little extra in addition to interest you are being charged. These fees can also be called lender fees so be sure to also use this term when you are trying to get information about the policy.
What Are the Costs?
The cost of the loan includes fees that go to lender but also other related third-party fees. These can include the credit report, appraisals, pest inspection reports, title policy, and other recording taxes and fees.
An estimate of these fees should be included in the Loan Estimate, which is required. You should ask for an estimate of these upfront before you apply for the loan.
Are You Able to Get a Loan Rate Lock?
Since interest rates change you may want to lock your loan rate if you think interest rates are going to move up. Learn how long the rate will be locked in and if you are getting it in writing.
Is There a Prepayment Penalty?
A prepayment penalty lets the lender collect extra interest if you pay off the loan early, either by selling the property or through a refinance. Be sure to ask how much the penalty is and how long the prepayment penalty will last. Some are only in effect for the first five years.
How Much Time Does It Take to Fund?
The average loan processing can be between 21 and 45 days. Ask about the anticipated turnaround time and any anticipated obstacles that may delay closing.