Questions to Ask Your Mortgage Broker Before Making a Decision
Whether youre buying your first home or refinancing your current mortgage, its crucial to ask the right questions. These can help you find a lender thats right for you and your needs. But how do you know which questions to ask your mortgage broker before making a decision?
1. What Is Your Loan Type?
The mortgage type you choose can make or break the overall cost of your new loan. A good broker will understand your financial situation, then suggest the best mortgage type for you. Here are a few types to consider:
Government-Backed Mortgages
These are often purchased by Fannie Mae and Freddie Mac, and typically offer lower interest rates than conventional loans. However, government-backed loans also have stricter guidelines than conventional ones.
2. What Is Your Annual Percentage Rate (APR)?
The APR is a way to compare mortgages by taking into account both the interest rate and lenders fees. This will give you an idea of how much your monthly payments will be, and what your total cost is over the life of the loan.
3. What Are Your Closing Fees?
Most mortgage lenders charge closing costs, which are fees related to preparing and processing your mortgage. They can range from zero to about 1% of your loan amount. You can usually negotiate these fees, but theyre often worth asking about upfront.
4. What Are Your Documentation Requirements?
Getting approved for a mortgage requires documentation that shows your income, employment, and credit history. A good mortgage broker will guide you through the process of gathering all these documents.
5. Whats Your Underwriting Process?
A mortgage broker will work with several lenders to process your application. A direct lender, on the other hand, will handle the entire process in-house.
6. What Are Your Refinance Options?
Refinancing your home can be a great way to reduce your monthly payment and pay off your mortgage sooner. Your broker can help you find a refinance thats right for you, especially if you have high equity in your home or strong credit.
7. Can You Get Me a Mortgage Rate Lock?
Many lenders will offer to lock your mortgage rate for a set period of time. This is a great way to lock in your mortgage rate before the market changes and your interest rates go up.
8. What Are Your Fees?
A lender may charge you various fees for a number of services, including closing costs, origination fees, underwriting fees, and prepayment penalties. You should know what these fees are before you close your loan, so you can avoid extra charges later.
10. What Are Your Qualifications?
A good mortgage broker will have extensive experience. This means that theyve worked with a lot of different people and situations, and are therefore familiar with what works and what doesnt for their clients.
If youre unsure about your lender, its important to speak with a few different lenders before choosing one. Youll want to find a lender that has a good reputation and is able to provide you with the best loan terms.