Buying a home is a complex process, and you likely have a lot of questions to ask a mortgage lender before you start the process. And even though you’ve done research in advance, you probably have additional refinance questions, mortgage loan questions, and others. When you reach out, here are some questions to ask a mortgage lender that can help steer your conversation and get the information you need before you buy.
1.What types of loans are available, and which might be a fit for me?
When you first approach a lender, ask what types of loans are available to you. Don’t be shy about asking questions about anything mortgage related, because the mortgage professional you speak with should be more than willing to discuss the details, types of loans, and anything else to help you decide which one would be optimal for you.
2. What will the interest rate and APR be on my loan?
Many people focus on interest rates, but it is also important to know the annual percentage rate (APR). APR is a more accurate picture of exactly what the loan is going to cost you each year, as well as over the duration of the loan. You should ask your mortgage lender if lowering the interest rate is possible, and whether you can pay for discount points to get a lower-interest loan.
3. What costs are associated with the mortgage loan?
Any mortgage comes with some associated costs. For example, mortgage points or discount points are fees that you might pay to a lender to secure a lower interest rate. Then there are closing costs associated with creating documents and funding the loan. Other costs you could have to pay during the process are:
4. Is there a penalty for early repayment?
Paying a mortgage off early can reduce costs in the long run because there will be less interest to pay. Always consult your mortgage lender to make sure that there is no prepayment penalty for paying off your mortgage early, or know what options without prepayment penalties exist for you.
5. Does the lender have in-house underwriters?
Mortgage underwriters are responsible for reviewing applications, making conditions for approval, or denying applications. When underwriting is done in-house, it can significantly decrease the amount of time it takes for your loan to be processed. If underwriting is not done in-house, ask how long the underwriting process usually takes your mortgage lender.
6. How long will it take to fund the loan?
The amount of time that it takes to fund a loan is information that you need to know, because when you set up the purchase contract you will have to choose a closing date. Not securing funding by the closing date can cause serious problems — especially if you are ending a lease at your current home or have a specified move-in date at your new home. Check with your mortgage lender to get an idea about the date of funding. Ask lots of questions, and be sure you are choosing an appropriate closing date.
Buying a home is an exciting but challenging process. If you know the right questions to ask a mortgage lender, you will be better prepared for the process. Contact one of Mr. Cooper’s expert mortgage professionals and learn about your options.