Rabu, 25 Juni 2008

10 Questions to Ask Your Mortgage Lender

When you sit down with a mortgage lender, you should be the one in the driver's seat; after all, you are the one that will be paying for this mortgage in the coming years. To help you stay in control of the things that are happening as well as stay informed of what you need to do next or if you are dealing with the right lender, here are ten questions you need to ask.

What is the interest rate I will be getting with this mortgage?

Obviously, this is the most important question that's already on your mind. In order to negotiate for a good interest rate, you need to ask what you will be offered from a number of lenders, keeping in mind that a poor credit rating might be negatively affecting what you can expect.

Can I set up a way to lock in my interest rate?

The goal of any home mortgage is to get the lowest interest rate. But if this isn't possible in the current market, you might want to choose a loan that has a variable interest rate, keeping you available to lock in the lowest interest rate once it comes up in the market. This means that you might have to pay a higher interest rate for a while.

And depending on the lender, you might need to stay in this variable interest rate setup for a certain time period. Check to see just how long that is and how much it might cost you to lock in your low interest rate.
A good interest rate of about 6 to 7% is something a person with good credit can expect to get, though this does vary from region to region, lender to lender.

What are closing costs can I expect?

This question is especially important when you don't have a lot of money to spend during the mortgage process. If you can determine the amount of the closing costs now, you can add these onto your loan to help you move the purchase along.

Will I be penalized if I pay my loan off more quickly?

If you've set up a 30 year fixed mortgage payment plan, but you think you can pay it off more quickly, check to see how much it might cost you to do so. Since the lender will be losing money from the interest you won't be paying on the loan, they tend to create a penalty for those that pay off their homes sooner.

What down payment is necessary?

In most cases, the lender will require that you provide 10 to 20% of the home's value as a down payment. However, this is not necessarily something that needs to come from your pocket – at least, not right now. You can actually add on the down payment to your mortgage with some lenders.

Find out what the down payment will be and then if you can create a loan plan that will handle those costs too.

How many origination and discount points will I be responsible for?

If you don't know what points are, read up before you head in to talk with your lender. These points can mean that difference between a high mortgage payment and additional costs and having a very reasonable agreement.

How long will the loan process take?

If you have a particular house or moving date in mind, knowing how long the lending process will take will help you choose the best mortgage company.

What might delay my loan or the approval of the loan?

By finding out what the potential problems can be during the loan process, you can make sure you are avoiding them.

What do I need in order to qualify for this loan?

This is a great question to ask when you're not in the market at the current time. It will give you a change to get your credit and your affairs in order so that you are the best possible candidate for a mortgage agreement. Ask the lender to be as specific as they can about what you need to do.

What documents will I have to have available?

Since not all of us are great record keepers, you will want to ask well in advance of your loan process what you will need to find and have on hand for your loan application.

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Finding a Good Lender

As we learn more about the sub-prime real estate "melt-down" of 2007, the selection of a good lender is apparent in its importance as a key step to success. A new home buyer must pay careful attention to this selection and a good realtor will facilitate the process and add to your success. Your realtor can provide you with some web sites for information and a list of some proven lenders. These referred professionals will explain their financing programs and options to you, but do not hesitate to ask your realtor for additional background and information.

For example, a pre-approval letter is an excellent tool to use as you prepare for your house search. What is a pre-approval letter? It is a written statement from your lender that tells the Seller that you indeed qualify for a loan. It provides the Seller confidence that you are a "qualified" buyer and facilitates the offer negotiation process. A pre-approval letter will provide you with a loan amount for which you will be approved. In addition, this is great information to have on the front because it helps you set your price parameters as you shop for a house. It also gives bargaining power for your real estate agent to use as they negotiate an offer on your new home. The loan process is complicated so do not hesitate to ask a lot of questions.

Lenders come in various sizes, organizational structures and degrees of complexity. There are banks, mortgage companies and brokers. All of these can provide you with the pre-approval letter, but not all have loans that will fit your specific needs. For example, a good Bank will have a selection of its own home mortgage programs to offer the prospective home buyer. The Bank’s lending officer will work with you to find a loan structured to fit your needs and may well have access to other banking services that will help you to become established in the new neighborhood or community.

A good Mortgage Company and/or a good Broker will work with multiple lenders and banks to find you the best home mortgage programs available. They can work with you to obtain the program you feel best satisfies your financial needs. Your approach should be to work with these individuals as partners. You want to go with whoever has the best interest rate and the best programs that work for you. Of course, you want to choose someone you fell you can trust because this is a trusting relationship.

So, be sure to ask your realtor for a referral, check various web sites, and call around to a couple of lenders to find out what programs are available. Think of this as a partnership for the future and remember it is important to keep in mind that your goal is to find the right program that is affordable and sustainable over time. Finding the right lender, who you trust, and securing a program that will fit your budget for the long-term is a significant key to success.

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