Preparing to buy a home? We encourage buyers to ask prospective lenders these 10 important questions at or prior to mortgage application.
(1) What are your qualifying guidelines? Ask about requirements relating to your income, employment, assets, liabilities and credit history. Qualifications for 1st-time homebuyer programs, Veterans Affairs loans and other government-sponsored mortgages are typically less stringent. See Do I Qualify for a Mortgage Loan for more information on this topic.
(2) What documents will I be required to provide? Lenders require proof of income and assets, including bank statements, tax returns, W-2 statements and recent pay stubs. More may be needed to show your down payment and ability to pay closing costs. See Arranging Financing / Loan Application for more information on this topic.
(3) What is the interest rate on the mortgage? Ask for the lender’s loan estimate, which breaks down the interest rate and fees. It will include the annual percentage rate, or APR, which accounts for the interest rate, points, fees and other charges you will pay for a mortgage. See How to Get the Best Mortgage Interest Rate for more information on this topic.
(4) What are your closing costs? Borrowers pay fees at closing for services provided by the lender and other parties, such as title companies. Lenders are required to provide a written estimate of these costs within 3 days of receiving a loan application.
(5) When can I lock the mortgage interest rate? Interest rates might fluctuate between the time you apply for a mortgage and closing. To prevent getting a higher rate, you can lock the rate, and even the points, for a specified period. Fees may apply, but not always.
(6) Is there a prepayment penalty? Some lenders charge a penalty if you prepay on the mortgage. Some apply only when you refinance or reduce the principal balance by more than a certain percentage. Find out the penalty specifics and see if your lender will lower the rate on loans with one.
(7) What is the minimum down payment and how would a larger down payment impact the mortgage interest rate on the loan? A bigger down payment might mean a lower interest rate and better loan terms. With a down payment of less than 20%, you will probably have to get mortgage insurance, increasing your monthly payment. See Understanding Down Payments for information on this topic.
(8) How Many Discount, Origination Points? Lenders may charge discount points, origination points, or both. One point is equal to 1% of the loan amount. For example, if you get a $162,000 mortgage and pay 1 discount point, you’ll pay a fee of $1,620, because that’s 1% of $162,000. (Divide the loan amount by 100 to calculate 1%.)
- 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 and are part of the closing costs associated with the loan (these fees vary dramatically from $0 to 2% and buyers are strongly encouraged to question lenders on the rate they charge).
(9) How long will it take to process my loan once I enter into contract to purchase a home? Depending on how busy the lender is, it can take as little as 2 weeks or as long as 60 days. Be patient and forward any requested documents quickly to speed up the process. See How Long Does it Take to Close on a Home Purchase for more information.
(10) What Might Delay Approval of My Mortgage? A job change, an increase or decrease in salary, a new debt (DO NOT make any major purchases until after you’ve closed on your mortgage), a change in your credit history or change in marital status could delay your loan approval. The best way to avoid that is to put your financial life in a holding pattern until you reach the closing table. See 10 Things You Should Not Do While Buying a Home for more information.
If you, or someone you know is considering Buying or Selling a Home in Columbus, Ohio please give us a call and we’d be happy to assist you!
The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in; Bexley 43209 Columbus 43201 43206 43214 43215 Delaware 43015 Downtown Dublin 43016 43017 Gahanna 43219 43230 Grandview Heights 43212 Galena 43021 Hilliard 43026 Lewis Center 43035 New Albany 43054 Pickeringto, 43147 Polaris Powell 43065 Upper Arlington 43220 43221 Westerville 43081 43082 Worthington 43235