If you are planning on getting a home loan, there are a number of questions that you should ask the lenders you are thinking about borrowing from. The lender that you decide to borrow from can make paying back this type of loan fairly easy or very difficult. The more time you spend examining these options, the better your chances are of getting exactly what you need. You should never choose a particular mortgage lender until you have asked some of them the following questions.
1. What Interest Rate Will You Charge Me?
The interest rate on your loan is definitely going to be one of the more important things to consider before you decide on a particular lender. Each of the lenders you come across should be able to give you an estimate on the rate you will pay if you borrow from them. When you take the time to ask different lenders this question, you can get the best possible deal. The fact is that some lenders are going to charge you a higher interest rate than others.
2. What Will My Monthly Payment be?
Assuming you have already determined how much you can afford to pay on your mortgage each month, you’ll need to start getting quotes from lenders. Any reputable lender should be able to give you an estimate for your total monthly payment. In fact, you can quickly and easily get these quotes online. You want to make sure that your monthly payment isn’t so high that you cannot satisfy all of your other financial obligations.
3. Is My Interest Rate Fixed or Adjustable?
When it comes to getting a mortgage, there are fixed and adjustable interest rates. A fixed rate stays the same for the entire length of the loan, while an adjustable rate changes. Many people decide to go with fixed rate mortgages because the interest rate is more predictable, but they sometimes pay more overall. If you decide to go with an adjustable rate mortgage, ask the lender when the rate will start changing. When you have these details you will be able to make an informed decision.
4. What Fees Will I be Required to Pay?
There will most likely be numerous fees you will have to pay when getting a mortgage. When you are searching for the right lender, it is important for you to know what these fees are. You will be able to factor in the fees when determining what you can afford. The more of the fees you pay upfront, the less interest you will have to pay on the loan in the long term.
5. Will I be Penalized by Paying the Loan Back Early?
Some lenders do penalize borrowers for paying their mortgages back early, so this is something you will need to consider. You should ideally borrow from a lender that won’t charge you any additional fees for paying the principal of your loan back before the due date. You will definitely want to ask this question when you are looking into your lender options.
6. How Can I Communicate with You?
Not all mortgage lenders offer the same methods of communication, so you will need to find out before choosing one in particular. Find out if each lender system for communication and notifications. The last thing you want is to have communication problems with your lender, because it definitely won’t play out smoothly.
7. What is the Down Payment Requirement?
Anyone who wants to buy a house should make a down payment of at least 20%, but that is not always what the lender requires. You will want to find out what the minimum required amount is for a down payment before going forward. There are many loans options that will allow you to put down only 5%, but your interest rate is going to be higher. If you do not currently have enough to put down the full 20%, you should think about saving up.
8. Am I Required to Pay for Mortgage Insurance?
Not all mortgage lenders will require you to pay for mortgage insurance, but some will. Sometimes you will have to pay for this type of insurance if you put down less than 20% on your loan, which is all the more reason to do so. You could be required to carry a mortgage insurance policy until your debt-to-home-value ratio is at 80%.
9. How Long Will it Take to Get Approved?
The amount of time that it will take to get your mortgage processed will depend on a number of factors, including the lender you choose. Most lenders will be able to give you a good idea as to how long this process is going to take. Depending on if there are any complications, it could take anywhere from a couple of weeks to over a month to get approved.
10. What Documents do I need to Provide?
There will be certain documents that you will have to provide the mortgage lender with before they can approve or deny your loan application. When you know exactly which documents you need ahead of time, you can get organized and possibly speed up the entire process. These loans typically require a lot of paperwork, so prepare to keep yourself busy. The lender needs proof of your legal citizenship, income, employment history and other things.
A lot of people make a variety of mistakes when getting a home loan, but asking each lender the right questions can help you out a lot. If you want to get the best deal possible on a home loan, you will absolutely need to ask these questions. The answers you get from each lender will give you a good idea as to who you should borrow from. When you are doing this research, you’ll quickly find that each lender is very different. These questions can save you thousands of dollars and a lot of frustration with your loan.