6 Questions You Need to Ask Your Mortgage Lender

This economy has a lot of people asking a lot of questions!

It seems like every other day the Federal Reserve makes an announcement the economy is “slowing”, all though truer along the Midwest regions. These announcements come as mortgage rates are at record lows, a real opportunity for those homeowners looking to refinance or attain a mortgage.
People are buying! Many factors such as low interest rates and home prices have many active homebuyers pursuing new loans.
Whether it’s refinancing an original mortgage or the first time homebuyers, the market seems to be stabilizing and even showing growth.
It’s important you become an educated homebuyer, it’s also important to properly prepare yourself for the mortgage process. There are many new rules in place that could help save and help you from throwing your money away.

Of course this is the most obvious question, but it’s the most important! Shopping and comparing rates can end up saving you thousands of dollars; stay on top the mortgage interest so that you can compare rates. But beware of misleading advertisements that are common in the mortgage industry.
Read the fine print mortgage lenders don’t always disclose all the fees. Before using any figures to shop around and compare get an itemized breakdown of rates, points and fees that make up the final terms. Find out how many discount and origination points will I pay? At times, lenders charge pre-paid mortgage interest points to lower your interest rate that have no benefit to you at all.

Typically, mortgages have fees on services provided by lenders as part of the transaction. Be sure you know how much and what those fees might be early on. Lenders are required by law to provide a written good-faith estimate outlining closing costs within 3-days of receiving your loan application.
Find out at what time you can lock-in interest rates. What will it cost you to do so? Your interest rate could fluctuate from the time you apply to the closing. Therefore, it’s a good idea to lock-in rates. Ask your lender if lock fees apply. Keep track of what the experts forecast see Rate Trend Index.

Pre-Payment Penalties

At times, you may be assessed a pre-payment penalty on your loan. This penalty could be 1% of the loan amount still others might be set at equal to six months’ interest. Check to see if this only applies if you refinance or reduce the principal balance by over 20% while lenders may assess these if you sell your home.
Find out the duration of any penalty period particularly the method used to calculate the penalty. Many lenders provide lower interest rates to borrowers that accept pre-payment penalties. Find out your minimum down payment required the loan. Typically, the down payment is 3% to 20% of the buy price. Generally, the more money you put down, the lower your rate and better the terms.

Any Guidelines for My Loan?

Most often these requirements are contingent on your income, employment, assets, liabilities and credit rating history.
Keep in mind, first-time home buyer programs, VA loans and other federal mortgage programs generally offer less demanding qualifying guidelines than conventional loans.

What Paperwork to Bring?

Most lenders also require proof of income and assets prior to approving your loan. They may require additional documentation as well.
Some buyers having excellent credit ratings could potentially qualify for what is known as “no-documentation” or “no-doc” loans. However, these may carry hefty down payment and higher interest rate.

Loan Application Process Time?

This depends on a number of variables. For example, if the market for loans is brisk, underwriters get backed up, verification takes longer, appraisals move slower and bottlenecks develop in the loan pipeline.
Some might tell you two weeks, but 45 to 60 days is probably more realistic. You’ll need to determine how long to lock in your loan.
The mortgage process can be very overwhelming. Arming yourself with these questions for your lender will help you save time, money, and you’ll be better educated from any scams mortgage writers can sneak in. Knowledge is power!