Decide Whether You Need a Mortgage Broker
There are numerous benefits to working with a professional and experienced mortgage broker. A broker can save you a lot of time by doing the research necessary to help find lenders you can work with. Nevertheless, you should be aware of the profits brokers earn by arranging the deal between the lender and the new homeowner. If you decide to work directly with a broker, it’s important to take the time to do a little research of your own. Ask for references and learn from friends, family or other homeowners what their experience was like working with a broker. Showing up to a meeting prepared with questions to ask a mortgage lender, can make all the difference in the world.
Talk to Your Real Estate Agent
Consult your real estate agent for recommendations. A good agent will not limit recommendations to his or her in-house lenders. Take advantage of this recommendation, and make sure the lender you speak with knows you came to them through your agent. This connection can be a big help when it comes to reducing closing costs.
Research the Lender’s Reputation
No matter how you heard about a lender, it is important to do a background check. If you can get referrals, make sure you speak with them. Check online reviews and don’t hesitate to bring up any questions you may have – learning in advance can save you money in the long run.
To help you get started, here are 10 questions to ask your mortgage lender:
1. What is the interest rate on this mortgage?
Ask for the lender’s loan estimate, which includes interest rate and fees. It will also include the annual percentage rate, or PR, which accounts for the interest rate, points, fees and other charges you will pay for a mortgage.
2. How many discounts and origination points will I pay?
Lenders may charge discount points, origination points or both. One point is equal to 1% of the loan amount. Discount points reduce the interest rate — they are prepaid interest and are tax-deductible. Origination points are fees charged by the lender to cover the costs of originating the loan.
3. What are the closing costs?
Borrowers pay fees at the close of escrow for services provided by the lender and other parties. Lenders are required to provide a written estimate of these costs within three days of receiving a loan application.
4. When can I lock in the interest rate, and what will it cost me to do so?
Interest rates may fluctuate between the time you apply for a loan and closing. To prevent the risk of a higher rate, you can lock in the rate, and even the points for a specified period. Fees may apply, but not always.
5. Is there a prepayment penalty on this loan?
Some lenders charge a penalty if you prepay on the mortgage. Some apply only when you refinance or reduce the principle balance by more than a certain percentage.
6. What is the minimum down payment required for this loan?
A bigger down payment might mean a lower interest rate, better loan terms and reduced mortgage insurance. With a down payment less than 20%, you will probably be required to pay for mortgage insurance, increasing your monthly payments.
7. What are the qualifying guidelines for this loan?
Ask about requirements relating to your income, employment, assets, liabilities, and credit history. Qualification for first-time homebuyer programs are typically less stringent.
8. What documents will I have to provide?
Lenders require several documents for review, including proof of income and assets, bank statements, tax returns, W-2 statements, and recent pay stubs.
9. How long will it take to process my loan application?
It can take as little as two weeks or as long as 60 days. Be patient and forward any requested documents quickly to speed up the process.
10. What might delay approval of my loan?
A job change, an increase or decrease in salary, a new debt, a change in your credit history or change in marital status could delay your loan approval.
About Peak Finance Company
If you have additional questions, we have resources to serve you. Peak Finance Company is a mortgage banker and broker that specializes in solutions-based lending, currently operating in California, Oregon, and Georgia. The company prides itself on offering a personalized and creative approach to the mortgage-lending process, one that makes it possible to offer loans to individuals in a wide variety of circumstances and at the most competitive rates.