5 Questions You Should Ask Your Mortgage Lender Before Signing

5 Questions You Should Ask Your Mortgage Lender Before Signing
  • Opening Intro -

    Getting a mortgage is a huge commitment, and the amount of information you will get during the process is often overwhelming.

    Fortunately, you'll usually be working with someone whom you can discuss the process before you sign.

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Below are just a few of the questions that you should ask your mortgage lender before you make a commitment.

What Kind of Mortgage Loans Do You Offer?

When looking at mortgage loans, you should always start by figuring out what kind of products the lender offers. While most people assume that all mortgages are conventional, there are many different products that might suit you.

From first-time homeowner loans to VA loans and special programs, there might be ways for you to save on your mortgage that you’ll only know about if you ask the right questions.

Are You Pulling My Credit Today?

It’s also a good idea to learn whether or not your credit is going to be pulled when you talk to your lender. A credit pull will cause your credit to go down, but more importantly it will put you in a grace period in which further mortgage inquiries won’t hurt your credit score.

If you’re getting a hard pull done on your credit today, you’ll definitely want to keep that in mind as you continue to shop.

What’s the Interest Rate?

You need to know the interest rate for your mortgage. This is going to play a huge role in how much you pay over the lifetime of the loan, so it’s actually one of the most important numbers that you’ll need to know.

While your lender can only give you a vague rate before closing, it does allow you to understand a bit more about what you will be charged.

You also need to decide whether you want a fixed or adjustable-rate mortgage (ARM). Either of these can be beneficial depending on the current market and your financial situation.

In a fixed rate mortgage, your interest rate stays the same for the entirety  of your loan period regardless of fluctuations in the market. This is great if you happen to take out a mortgage while interest rates are low.

An ARM means that your interest rate will change based on the current market. This means that over the years, your interest rates can go up or down, leading to less reliable monthly payments.

Usually, you’ll keep your initial rate for five years (though it may be more or less depending on the lender and the loan), but after that, your interest rate will be reassessed each year. If you take out your mortgage when rates are higher, an ARM may allow you to pay a lower rate down the road.

What Will My Monthly Payment Look Like?

Based on each person’s personal budget, every buyer has a monthly payment that they cannot exceed. Most lenders can give you a good idea of what your mortgage payment will look like as well as an idea of what you’ll pay including insurance and taxes. This will allow you to figure out what you can afford and how getting a mortgage will fit into your budget.

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What Do I Need to Do Between Now and Closing?

Finally, ask about what you’ll need to do before closing. In some cases, you might need to pay down debts or sell your current home. Others may just be reminded not to take out more debt. Regardless of the answer, this will give you some guidance before closing.

Never be afraid to talk to your mortgage lender. If you are able to ask a few basic questions, you’ll have a much better idea of what a mortgage really means for you.

Image Credit: ask your mortgage lender by envato.com

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Consumer Tips reference:

GUIDE: looking to refi your home

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