Below are 10
important questions to ask when you are
interviewing with your lender.
How long will it
take to process my mortgage loan application?
It will depend
on how long it takes to get a property
appraisal, check your credit report, and to
verify your financial and employment
information. It typically takes between 45 to 60
days, but can take as little as 30 days or as
long as 60 days.
What documents will I need?
Be sure to have
proof in income and assets and employer
information. For more details, see the section
on Necessary Paperwork.
What do I need to qualify for the loan?
Mortgage lenders
take many different things into account when
considering your loan, including your income,
employment history and security, assets and
liabilities, credit record, the property
appraisal, and how much
down payment you can put
down.
What is the minimum down payment?
Your
down
payment can help in determining your interest
rate, the terms of your loan, and whether or not
you have to pay private mortgage insurance (PMI).
Typically, the more you can afford as a
down
payment, the lower your interest rate, and if it
is 20 percent or more, you don't have to pay
PMI.
See the section on down payment and private
mortgage insurance for more information.
What percentage is the annual interest rate?
When comparing
between different loans, ask for the
annual
percentage rate, or APR, which is generally
higher than the initial quoted rate because it
takes into account all lenders fee.
What are the points or origination fees on the
loan, if any?
Points are
prepaid mortgage interest. You may have to pay
points at closing in order to get a lower
interest rate on your loan. Origination fees are
charged to cover the cost of processing your
application or to simply boost profits. See the
section on points and origination fees for more
information.
Can I lock in the interest rate?
Due to daily
fluctuations in interest rates, your final
interest rate may not be the same as the
initially quoted value by the time you close on
the home. Therefore, ask if you can lock in the
rate for a specified period of time, and if
there are any fees to do so. Also, ask if you
can lock in points.
What is the ‘Good Faith Estimate' of closing
costs?
In addition to
your
down payment, there are also a one time
closing cost to consider when applying for a
mortgage. As these can add up to a hefty sum, be
prepared and remember that some services, like
the credit report and property
appraisal, must
be paid for upfront.
Does the loan have pre-payment penalty?
Unless stated
otherwise, lenders may be able to charge you
thousands of dollars for paying off your
mortgage early. Find out the duration of any
penalty period and how the fee will be
calculated. You may also be able to avoid this
penalty if you agree to keep the payments to a
previously specified amount.
What factors can delay loan approval?
If the lender
discovers discrepancies in the information you
provided or in your credit report that you did
not disclose. Therefore it is important to
obtain a copy of your credit report before
applying, and to disclose in detail any
potential problems. Also, notify your lender if
there are any changes in your personal or
financial status during the application process.
Mortgage Glossary4
