Posted by Christine Owens on April 27, 2017
5 Questions Every Borrower Should Ask Their Lender
Are you preparing to purchase a home? Whether you are a first time home buyer or seasoned home buyer, it is always important to know all of the details of your mortgage before you sign the bottom line. At Hallmark Home Mortgage, we work with our clients to ensure they are fully informed and guided through the entire process. But, we always recommend that buyers become informed as well because knowledge is power and leads to a more comfortable experience which is important for such a major financial decision. Below are 5 questions every home buyer should ask their lender so that they can be well-informed during the purchasing process:
What Can I Do to Get the Best Possible Mortgage Rate?
- This is a great question because every buyer wants to get a better rate but it is not as simple as waving a magic wand. While you can pay points and buy down your rate, there are also other ways you can improve your chances of qualifying for a better rate. If you pay off debt and improve your debt-to-income ratio, or improve your credit score, you significantly increase your chances of qualifying for a better loan and interest rate.
When Can I Lock In My Interest Rate?
- Interest rates are constantly fluctuating and trending upwards this year so it is important to ask your lender how soon you can lock in your mortgage rate. Additionally, ask if you will be paying to lock in your rate. Some lenders will allow you to lock in your rate for an extended period of time but you may have to pay to do so.
What Are the Closing Costs for My Loan?
- Closing costs can vary significantly from lender to lender. Many borrowers get focused on having enough for a down payment that they forget they must pay closing costs to finalize the loan. Closing costs include loan origination fees, appraisal fees, etc. Be sure to ask what the closing costs are (or an estimation of them) so you are not left scrambling right before closing on your new home.
How Much Do I Need for My Down Payment & Will I Pay Mortgage Insurance?
- These are two important questions that are inextricably linked. There are a variety of loan products available that do not require a 20% down payment which is helpful for many borrowers. But, what borrowers may not know is that if they put less than 20% down, even though the loan does not require it, they may still be requires to pay private mortgage insurance. If required to pay private mortgage insurance, it typically falls in the range of .5% – 1% of the total loan amount depending on the size of your down payment and your credit score. It will add a sum to your monthly payment so it is important to clarify.
What Documents Are Required & How Can I Best Expedite the Process
- Having all of the documents required to secure your loan is an important part of the process. This may vary slightly from lender to lender and you likely are not sure exactly what they want so be sure to ask. Escrow can easily get slowed down by lack of documents or changes in information. It is best to prepare all documents ahead of time, including proof of income (pay stubs), proof of assets, personal identification, etc. Additionally, just before buying a new home and once the loan is in process it is important that you do not make any major changes so that the loan can close quickly and efficiently and does not get delayed.