It is important to make sure that you are taking a loan from a well-known and authorized mortgage broker. Always ask potential questions from your mortgage lender before you commit to a loan. It is beneficial to ask questions which will help you get the type of loan you want. The more your broker knows about you and your needs, the better he will be able to guide you. Not all lenders are the same, so it is important to do your research in the process of refinancing or purchasing a property. Your first step should be making a list of questions before you make any decision.
Here is a list of questions that you can ask your mortgage lender:
What types of loans are available?
It is better to ask for the types of loans, tell the lender to explain the pros and cons of adjustable-rate loans, fixed-rate loans since they can change over time. Other loans include interest-only loans and negative amortization loans; find out how each would fit your personal circumstances.
The interest rate doesn’t change with the fixed-rate loan so that you will know your monthly payment. The longer the term will be, the cheaper will be your monthly payment. An adjustable mortgage rate can fluctuate depending upon the market, but typically not within the first five years. You can gain more information from your mortgage broker before making a choice.
How can you qualify for one?
Mortgage lenders scrutinize various factors like property, income, assets, and credit. Your credit report is viewed to get the report of your credit score as well as your existing debts; they check the lowest credit score of all borrowers on loan. For example, the score for FHA is 580 if you are trying to purchase. For most conventional loans, the qualification baseline is 620. Besides credit, income is also important because it’s compared to your existing debts to obtain your debt-to-income ratio (DTI), and you must keep it down to 45% to qualify for most loan options. Finally, the lender will check your property and assets. The lender will look at your assets to check whether you have money for the down payment. In the case of a property, an appraiser has to ensure that the home is safe to live in and assign a property value.
What your monthly mortgage payment may include?
If you make a down payment of less than 20%, then your monthly mortgage payment will differ depending upon whether you have an escrow account for your taxes and insurance. This is because every mortgage payment will include the amount that you will as a loan and the interest. In addition, if you have an escrow account, your payment per annum will also include homeowners insurance and property taxes.
What is their average loan processing time?
Ask the lender about their average loan processing time. The purchase is closed at less than 30 days at quicker loans, whereas refinances close a little faster because there is no home inspection since an appraiser is not available. Processing time takes a little longer, depending on the seller and the purchase situation.