It reveals more about the candidate's research capacity and knowledge. If you're buying a home for the first time, you might be wondering what questions to ask when talking to a mortgage lender. We've put together 14 essential questions to ask your lender or mortgage broker so you can rest easy knowing you're ready for what lies ahead. A conventional 30-year fixed-rate mortgage loan is the most common type of mortgage loan.
Because the term is so long, monthly payments are lower and the fact that the rates are fixed means that your interest rate will stay the same for the entire life of the loan. However, the longer the term of your mortgage, the more interest you'll have to pay on the loan. So, if you can afford higher monthly payments, it might be worth choosing a 15- or 20-year term. Mortgage points (sometimes referred to as “discount points”) are an optional charge you can pay at closing to “buy a lower interest rate” and save on the total cost of the mortgage loan”.
The cost of each mortgage point equals 1% of your total loan. Ask your lender how much income you need to buy a home and what sources of income they consider when calculating your total purchasing power. Finally, ask your lender what documents you need to provide to prove your income, such as W-2 forms, pay stubs, bank account information, and other materials. You may assume that you need a 20% down payment to buy a house.
However, in some cases, you can buy a home with as little as 3% down payment. Certain types of government-backed loans even allow you to get a mortgage with a 0% down payment. The oft-quoted 20% figure has to do with avoiding private mortgage insurance (PMI), which protects the lender if you don't repay the loan. You can cancel the PMI of a conventional loan as soon as you accumulate 20% of equity in your home, and your lender will automatically cancel the PMI as soon as you reach 22% of your principal housing.
Closing costs are the processing fees you pay to your lender to pay off your loan. Some typical closing costs include appraisal fees, opening fees, attorney fees, and title insurance. The specific closing costs you'll pay will depend on where you live, the down payment, and the size of your property. Closing costs typically range from 3% to 6% of the total value of your loan. The 14 questions we just reviewed can serve as a starting point when choosing a mortgage lender.
The following questions aren't necessarily what you should ask your potential lender, but they are questions you may still have about the process of finding a mortgage lender. Mortgage insurance is generally required for most loans with a down payment of less than 20%. The type of insurance varies depending on the loan, and the amount you pay may vary depending on the lender. PMI, for example, can cost between 0.5% and 1% per year. Rocket Mortgage, 1050 Woodward Ave.
Mortgage brokers are financial experts who help customers purchase the right financing option for their mortgage. Given the differences in their roles, the questions you would ask a mortgage broker are different from those you would ask a lender. If you find a good deal on your own and want to check with a mortgage broker to see what you have to offer, it may be wise not to tell the broker the terms of the best deal you've found. By interviewing mortgage brokers, the most suitable candidate will demonstrate the ability to work independently, excellent negotiation skills, a confident personality, and a passion for helping clients. A competent mortgage broker can be of great value to people who don't bother to search for a good deal or for people who may be turned down by most lenders due to credit problems.
In addition, some lenders pay higher fees for certain loans (not surprisingly, they are the most profitable) to encourage mortgage brokers to put pressure on them. Acquiring a mortgage license is a critical step in building a thriving mortgage career, but the real fun begins when you finally land your first mortgage-related job. Some mortgage brokers work primarily with specific financial institutions and promote lenders with whom they have long-lasting relationships. From loan officer positions at financial institutions such as credit unions to loan processor positions at mortgage brokerage firms, there are many jobs available for a newly licensed mortgage professional.
As a result of the services that brokers provide, you pay them a commission, which is a percentage of the final amount of your mortgage. This is a cause for concern if you're talking to a mortgage lender or mortgage broker, but it's more common to talk to brokers. Before you get a loan, you need to understand how lenders and mortgage brokers are different, so you know who the help you need is from. However, a mortgage broker works with borrowers to help them compare prices and find the right lender for their circumstances.
For example, if you find a mortgage broker who was in the mortgage business in the early 2000s and was able to survive continuously through the economic challenges of the late 2000s until today, consider turning to that agent.
