There are a lot of factors to consider when buying a home. One thing that often gets lost in the shuffle of the home search is the mortgage loan. Obtaining home financing is sometimes treated as an afterthought despite the fact it is a time consuming and complex process. As any Realtor can tell you, mortgage loan pre-approval is an essential first step in the homebuying process. Working with a loan agent you can trust (and that works well with your Realtor) is a key component to a successful home search. Here is a simple and quick list of questions to ask potential lenders when you meet them.
1. What are the most popular mortgages you offer? Why are they so popular?
2. Which type of mortgage plan do you think would be best for me? Why?
3. Are your rates, terms, fees, and closing costs negotiable?
4. Will I have to buy private mortgage insurance? If so, how much will it cost, and how long will it be required? (NOTE: Private mortgage insurance is usually required if your down payment is less than 20 percent. However, most lenders will let you discontinue PMI when you’ve acquired a certain amount of equity by paying down the loan.)
5. Who will service the loan — your bank or another company?
6. What escrow requirements do you have?
7. How long will this loan be in a lock-in period (in other words, the time that the quoted interest rate will be honored)? Will I be able to obtain a lower rate if it drops during this period?
8. How long will the loan approval process take?
9. How long will it take to close the loan?
10. Are there any charges or penalties for prepaying the loan?
In a purchase transaction, #9 is important as the purchase offer written by the buyer and Realtor is contigent upon financing within a specified time. #5 is a bit of a loaded question since some lenders sell their loans on the secondary market for fun and profit, meaning that who you make the payment to today may differ from that of tomorrow. #4 is important as it is a additonal monthly payment and part of the loan qualification process.
For more information, please visit my buyer’s library at http://www.JosephCapote.com. Feel free to ask any additional questions by contacting me directly.
Used with permission from Real Estate Checklists & Systems, http://www.realestatechecklists.com.
Filed under: Buyer's Blog, first time homebuyer, home loan, mortgage, mortgage loan
Joe Capote 