When purchasing a house, one of the crucial decisions you need to make is choosing a mortgage lender. While it may be easier and more convenient to work with a lender recommended by your real estate agent, this is not a guarantee that you will obtain the best rate and the type of mortgage suitable for your unique situation. Thus, it is best to speak with several mortgage lenders to allow you to compare loan options.
If you don’t know exactly what to ask when you talk to a lender, the following questions will help you determine an excellent mortgage deal. Keep them in mind.
What is the best loan program for me?
An ideal loan program is one that will satisfy your financial needs. Some of the popular loan programs you must consider are:
- Conventional Loans – This loan type lets you enjoy either shorter loan terms or low monthly payments.
- VA Loans – Veterans, as well as active duty service members, applying for this loan will benefit from no mortgage insurance and zero down payment.
- FHA Loans – This popular, government-insured loan program is ideal for first-time buyers. Expect affordable monthly mortgage payments, relaxed credit requirements, and low down payment with this loan program.
What is my interest rate?
Your lender will give you an interest rate based on the following factors:
- Type of Loan – Your loan type, along with your down payment, will determine your interest rate.
- Property Location – Lenders may offer different rates depending on where you live.
- Credit Rating – This is a score lenders use to assess your ability to pay back loans. Your interest rate will also depend on your current credit score. Remember that you will have a better chance of obtaining an excellent interest rate when you have a high credit rating.
Is the rate of the mortgage adjustable or fixed?
Adjustable-rate mortgages, or ARMs, have interest rates that change over time to reflect the conditions of the market. Fixed-rate home loans, on the other hand, maintain the same interest for the life of the mortgage, which can range between 10 and 30 years.
If you are looking to go with an ARM, ask your lender these follow-up questions:
- When will the rate change?
- What is the loan’s margin?
- How often will the rate adjust after the initial change in the interest rate?
These follow-up questions will help you determine if you can afford to make your monthly payments under an ARM.
Does the loan come with a prepayment penalty?
Some mortgage lenders charge a penalty if you pay off your mortgage early. Find out the details of the penalty and ask if you can get a lower interest rate from your lender if you pick a loan program with a prepayment penalty.
What documents should I submit?
Usually, lenders require proof of assets and income, including recent pay stubs, W-2 forms, tax returns, and bank statements. You can ask your lender any additional requirements you need to submit to show that you can pay the closing costs as well as your down payment.
What if I need assistance?
If you need assistance in finding the best mortgage for your situation, feel free to consult with the mortgage consultants of KrisBakerLoans.com. Apart from successfully answering your mortgage-related questions, we will guide you in choosing the right loan program that fits your needs and financial situation.