6 Topics to Discuss with a Mortgage Lender

 

Making a home purchase is often the biggest financial decision of a person’s life.  A lot of stages go into the process, finding the right mortgage lender is particularly important because it defines the loan terms over the next few decades.  To avoid problematic results that arise down the line it is crucial for the buyer to understand how the mortgage lender can help them.  While there are some aspects of disclosure the mortgage lender is responsible for revealing to potential borrowers, it is up to the borrower to ask the important questions.  Here are a five of the most important things to ask a potential mortgage lender before signing anything:

 

  1. How is the market trend in the area at this moment?

The housing market fluctuates frequently and certain areas can be projected better than others.  Buyers should do their own research on this question and ask lenders as well.  Compare the answers as a gauge to test the integrity of the lender.

  1. Is this the best time with my current finances to buy?

Buyers will have a variance of issues from their current debt-to-income ratio and savings amount.  There might be advantages to renting for a while longer; on the other side of the token, it might be the perfect time to make an investment.  What is important is how the lender breaks down the possible options for each situation.

 

  1. How will improving my credit score help me get a lower rate?

A credit score can definitely affect the interest rate.  A mortgage lender can explain this in real numbers for each case and provide options for credit repair if necessary.  Lenders should also explain what parts of the credit history are important besides overall score.

 

  1. Will making pay points lower my rates?

Ask about discount points.  There may be offers to lower interest rates for each percentage that is paid off from the overall loan.  Some lenders might use this as a marketing tactic while others could keep it hidden in the fine print.  Inquiring about any offers to lower rates throughout the loan period is as crucial as knowing the factors that could raise the interest rate.

 

  1. Explain the complete payment schedule.

Find out the details of how much will be due upon signing and ask for a breakdown of the included costs.  The buyer should be aware of every payment they will be making each month and the payment types the lender will accept be it personal or bank check or wire transfer.  Also, find out about the projected property taxes and homeowner association fees if applicable.  The idea is to know every cost of the house so buyers can find the right property and loan to suit their conditions.

 

  1. How will my loan be serviced?

Until the buyer finishes paying off the loan the house still belongs to the lending company.  It is common for the ownership of those loans to be sold and split up to other investment companies.  Ask the lender about the history of the company and how they will proceed with these issues.  Understand if the monthly mortgage will be sent to a different company or not if the loan is resold.

 

These questions are essential tools for a first-time buyer but other aspects to choosing the right mortgage lender are much more general.  A mortgage lender should be someone who is easy to reach, responds in a timely manner and explains the numbers and facts in relatable language.