25 Questions to Ask a Mortgage Lender
Don't Decide on a Mortgage Loan Without Asking these Questions
Selecting a mortgage lender or finding the right mortgage loan can be a confusing and stressful process. A mortgage is a commitment that can last for 30 years, so you want to be sure you make the right choice. Here are 25 questions to ask when you are shopping for a mortgage loan. We hope it helps to simplify your search and make the process a bit smoother.
- What are your current mortgage rates? Explain the interest rate vs. the annual percentage rate (APR). Explain the difference between the fixed and adjustable rate mortgage loan options. What are the possible consequences of an adjustable rate? Is there a cap on the adjustable rate?
- Does that rate include any points? Read more on points below.
- What are the various loan terms and how will they affect the interest rate? Loans with shorter terms typically feature lower interest rates.
- What is the process for having a mortgage loan approved and how long does it take? When would I close?
- How do you communicate with home buyers? How often will I get updates?
- Do you approve loans in-house, or are they approved elsewhere?
- How can I avoid delays in the mortgage application process?
- Is there anything that could delay my closing?
- Are there mortgage origination points I need to pay? Points are fees that are usually equal to 1 percent of the total mortgage amount. A lender may charge 1 point, several points or no points.
- Can you give me a detailed breakdown of all costs and fees associated with the mortgage loan? This list of fees may be extensive and include an origination fee, application fee, appraisal fee, etc.
- Which of these fees is negotiable?
- Can any of those fees be rolled directly into the mortgage loan? Which fees can and which fees need to be paid out of pocket?
- Is there an opportunity to pay discount points? Some mortgage lenders offer discounts points, which are prepaid interest on the mortgage loan. The more points you pay, the lower the interest rate on the loan. If this is an option, you would need to do the calculation to see if it would be worth it for you. If you aren’t in the home long enough, it may not be worth it. You may actually be better off putting extra money towards your down payment and financing less.
- Can you tell me the amount that I will qualify for based on my income and debt?
- What is the minimum required down payment for the mortgage loan? Is that negotiable?
- Is there a prepayment penalty on the loan? You do not want to take a loan with a prepayment penalty. This means if you refinance your loan at some point over the life of the mortgage, you will be paying a penalty.
- Do I qualify or does the property I'm interested in qualify for any down payment assistance programs?
- Are there any loan assistance program you recommend?
- Will you provide me with a good-faith estimate including all fees and closing costs?
- Can you do an interest rate lock and if so, what is the fee to do so? If you’ve found the lender you want to use, you may want to lock in the interest rate. It’s good to know they provide a lock.
- Will I have to pay mortgage insurance?
- What would my monthly payment be?
- What type of documentation/paperwork will you need for a mortgage application?
- Do you do mortgage pre-approvals? What is the process for that and how long does a mortgage pre-approval last?
- What is required for me to obtain a pre-approval?
When shopping for something as important as a mortgage loan, you will want to find a mortgage lender you can trust and who can answer all of your questions. We hope you will consider Benchmark Federal Credit Union when comparing mortgage loans. We offer competitive rates for home purchase and refinance with a wide range of terms to fit your unique needs.