Things You Should Ask a Mortgage Broker
Since buying a home is one of the largest financial transactions that most people will undertake, it makes sense to do your homework and find the right loan officer for your mortgage. The following list represents some suggested questions you should ask of any loan officer before signing up for a loan.
- What will my true interest rate be on this mortgage? – Ask your loan officer to present you with the APR which is the acronym for Annual Percentage Rate. The APR will include not just the mortgage interest rate but also the points, margin and closing costs. If you are looking in to a mortgage with an adjustable rate then you should ask about the maximum rate, the frequency of the adjustments and which of the many indexes are used to calculate the rate for your loan.
- What loan is best for me in my current situation? Your loan officer should be able to provide you with at least two different loan scenarios, if not more. You need to compare the APR as well as the monthly payments and the number of years the loan is amortized. People with less than ideal credit may have to settle for only one type of loan, but it does not hurt to ask about the various options.
- Can you tell me the origination fees and the points? A point is equivalent to 1% of the loan value. It is possible for a lender to charge a borrower with more points in order to get a lower interest rate. However, this will drive up the closing costs. An origination fee is a price paid to initiate the loan. Some lenders operate with no origination fees while others may charge anything from 0.5% up to 3% of the loan amount as an origination fee.
- What are the closing costs associated with this loan? Closing costs are the items that are paid for in association with completing the loan. This can include, but is not limited to, the appraisal, property taxes, recording fees, title search, closing fee for the attorney, document preparation, and a survey. Ask for a breakdown of the costs and who is being paid on each item.
- Do you offer an estimate of the closing costs? The majority of lenders will provide a GFE, or Good Faith Estimate, to a borrower upon request. This document will list out an estimate for the various costs associated with the mortgage.
- What is the average processing time for this kind of mortgage? A mortgage can take two weeks or as long as 60 days to process completely. Ask your loan officer for an estimate of the closing time and keep one thing in mind; an estimate is an educated guess. Unforseen variables can delay or speed up the processing.
- Will you lock in the mortgage rate now? Ask your loan officer if they are locking in the rate or if they are looking at various lenders to try and get the best deal. If your lender requires an upfront fee to lock in a rate for 30 or 60 days, find out the amount to see if you are prepared to pay it.
A mortgage is very much like a business negotiation. Having your facts straight and ready to go can make a big difference in the rate as well as the type of loan you get.
Get all the facts before choosing a mortgage broker to work with. Refinancing or buying a home is a big commitment and you want to know you can trust whoever you hire.Google+