Make sure your lender passes this test BEFORE you give him your business
Thanks for requesting this important checklist of questions to ask your lender. My name is Aundrea Beach-Greco. As a Certified Mortgage Planning Specialist, I work for YOU! This checklist is just one of the ways I can help you get a better deal on your next mortgage, whether buying, selling, investing or refinancing.
Before you even pick up the phone to call a lender, give some thought to your financial situation and needs, both today and in the future. No lenders can provide the best mortgage for you without understanding your needs. And they’ll never understand your needs unless you can explain them clearly and specifically.
What I’d suggest is that you sit down with your spouse/significant other and consider some of the following issues. Only then will you be able to answer the questions any responsible lender will ask in order to help you choose the right mortgage, rate and features.
- How long are you planning to live in this home?
- How are your finances likely to change over the next few years?
- Which are you more comfortable with: mortgage payments that always stay the same OR payments that rise and fall with the Prime rate?
- How soon would you like to be mortgage-free?
- When will your children be entering college?
- When are you thinking of retiring?
OK, now that you have your needs and goals in mind, you’re ready to start making some calls. As I said, any responsible lender will ask you a lot of questions in order to narrow down the options and select the right mortgage for you and your family. But if you want to make sure you’re getting the very best deal available—after all, that’s exactly what you deserve!—you have to ask some questions too.
Today’s mortgage market is very complex, with more choices than ever before, innovative new features being introduced every day, and unexpected conditions and fees hidden in the fine print. The best way to protect yourself is to go through every item on this checklist with each lender BEFORE you go any farther.
- How much of a down payment will I need? Most mortgages require a down payment of somewhere between 3% and 20% of the purchase price. The higher your down payment, the more attractive your rate and terms will be. However, you may not be able to afford a high down payment. If you can’t manage a down payment of 20% or more, your mortgage is required to be covered by private mortgage insurance (PMI), which will involve paying an insurance premium.
- How much extra will it cost to lock in my interest rate? As you know, mortgage rates are changing all the time. If rates rise between the time you apply and your closing date, you can pay thousands of dollars extra over the life of your mortgage. Most lenders will let you lock in the rate you discuss at the time you apply so there are no surprises later. But there’s often a fee for this, so find out how much it might cost.
- Are you going to charge any discount points? Some lenders charge prepaid mortgage interest points that can have a big effect on the cost of your loan. Ask for full details.
- What’s the APR (annual percentage rate) on this mortgage? Be skeptical of the first rate you’re quoted. Always ask if it’s the annual percentage rate. The APR is usually higher because it includes the additional fees involved in procuring a loan. And don’t always believe the APR quoted in ads. Lenders often use bait and switch tactics: they’ll quote a low rate to get you in the door, but it may not include all the points and fees, or it may be almost impossible to qualify for.
- What are the guidelines I need to meet in order to qualify for this mortgage? Every mortgage has requirements that relate to your employment, income, down payment, credit history, assets and liabilities. First-time home buyer programs, VA loans and other government-sponsored mortgage programs typically offer easier qualifying guidelines than conventional loans.
- Can you give me an estimate of my closing fees? Every mortgage involves fees that are paid to the lender and other companies involved in the financing process. Ask for a realistic estimate of what those fees will be, based on the specific mortgage details you’re talking about. Any lender that can’t provide an estimate should be viewed with suspicion.
- How much will it cost to pay out this mortgage before the term is up? Sure, you may not plan to pay out your mortgage early, but what if you need to move or refinance unexpectedly. Some mortgages with low rates have HIGH prepayment penalties which make getting out of the mortgage VERY expensive. If your plans could change, it may make sense to pay a slightly higher rate and get a more affordable prepayment penalty. Be sure to ask about the terms and conditions of any prepayment penalty.
- What documents will I need to provide? Every mortgage requires you to provide some documents. But the number of documents can vary. As the name suggests, “Full Doc” loans require full documentation of income, assets, debt payments, credit history, etc. “Low Doc” loans require a minimum of documentation. However, you normally have to have very good credit and a large down payment to qualify for a Low Doc loan—and they can also carry a higher interest rate. Make sure you find out all the details.
- How long will it take to process this mortgage? Once your mortgage application is approved, it can take from two weeks to two months (or more!) to process and fund the loan. Because you’re going to be on a deadline (the closing date of your house), ask the lender for an accurate processing timetable. This will also help you decide whether you need to lock in your interest rate.
- What are some of the things that could slow the approval process? Nobody likes surprises, especially lenders! If the information you’ve provided is complete and accurate, there should be no delays. But changes to that information can really make a difference. If during processing, your income changes, you take on a new debt, you get married or divorced, or an undisclosed credit problem comes to light, there will be delays. Make sure you know exactly what the lender needs, so you don’t accidentally leave anything out.
- What do their existing or past clients think of the lender? It’s easy for a lender to tell you how great the service is. But the only way to know for sure is to talk to google them and check out what some previous customers have to say. Websites, Facebook, Twitter, client testimonials are a good indicator of how it is to work with that person. The more willing the lender is to share client opinions with you, the more confident you’ll feel in proceeding.
Use this checklist for each lending institution you contact, whether you speak over the phone or in person. It’s a good idea to do all this research on the same day since mortgage rates can fluctuate daily. Be sure to record the company name, contact name, type of mortgage quoted, interest rate, etc. along with all the answers to the questions.
you could let me take care of everything for you
AND end up with a better deal!
If you have the time, energy and patience to do this research on several different lenders, you’ll likely end up with a reasonably good mortgage. But if you want the ABSOLUTE BEST mortgage for your specific situation and goals, why not get professional help?
As a Certified Mortgage Planning Specialist, I work on your behalf. After analyzing your needs, I can shop the market for the rate and features that will achieve everything you want, at the lowest possible cost. And there’s NO CHARGE to you for my expert, objective service and advice.
I hope you’ve found this checklist useful. It gives you a really good idea of what’s involved in getting the right mortgage. If you choose to use this checklist to do it yourself, I’m glad I’ve been able to provide assistance.
However, if you’d like to make the whole process faster, easier and more affordable, please call me at 702-326-7866 to set up your FREE no-obligation consultation. I’ll sit down with you, analyze your requirements and set up a program tailored to your abilities, goals and comfort level.
Call me today!
P.S. If you’d like to get started even faster, visit my website at www.AundreaBeach.com then click APPLY NOW. You’ll be taken to a Pre-Qualification Application which you can fill out and submit at your convenience. Once I’ve reviewed your form, I’ll contact you to schedule your FREE no-obligation consultation and get you into the home of your dreams as soon as possible!
Mortgage Lender FAQ
QUESTION: Is it better to use a bank, a mortgage broker or mortgage lender to get a mortgage?
ANSWER: It depends. Each entity gets their money from the same source. There are several reasons of using an independent mortgage lender or broker over a bank. Brokers and lenders have several sources they can submit your loan application to. This makes them an attractive option, especially for borrower’s with difficult loans such as low credit scores, or income issues.
QUESTION: How many mortgage lenders should I apply to?
ANSWER: Unfortunately, there is no Goldilocks number that represents the right number of mortgage lenders to which you should apply. Some borrowers apply with only two, feeling certain that one or the other can provide the ideal loan, and give pricing comparisons. While others want to hear from five or six banks before making a decision. Either way it’s good to shop around to enure you are getting the best deal and that you are comfortable with the person you’re working with.
QUESTION: Does locking a rate commit you to a lender?
ANSWER: Most lenders do not charge a separate fee for rate locks within a certain period of time (ie: for 30 day period). The cost of a rate lock is priced into the rate you‘re offered. But you need to ask when discussing rates with your loan officer. Most of the time the loan officer will be quoting a 30 day lock, but don’t assume. Fees are usually only charged by the lender when the rate lock expires and the borrower wants to extend the lock period.
QUESTION: Should I get preapproved for a mortgage from multiple lenders?
ANSWER: Although financial experts recommend applying for loan preapproval with multipe lenders, consulting more than three lenders is generally a waste of time and money, as loan offers beyond this will vary minimally, if at all, from the first few.