Finding the right mortgage may seem easy if you listen to the numerous commercials on TV, the radio, and the internet. That is the first impression many folks have. However, there are reasons why traditional mortgage brokers still exist- low fees and good interest rates are not the be all and end all of a good mortgage.
There are many different factors that can influence how your loan process goes. It is up to you as a consumer to do your due diligence before entering into a mortgage contract. In the following guide, we will go over four questions you must ask your mortgage broker for the best deal.
What Kind of Loan Should I be Applying for?
Knowing what kind of loan you are applying for can be half the battle. You want to be able to describe your situation to the lender and he or she should be able to help you determine what kind of loan will best fit your needs. These loans could be something like fixed or adjustable rates. It could also be something like an FHA loan. You will need to know how all of these will work to make the best decision on what to apply for. All of this should be covered in the pre-approval process with your lender.
How Much Experience Do You Have with My Type of Loan?
Different types of loans require different levels of expertise from a mortgage broker. For example, there are different requirements for rural loans when compared with getting a loan in a major city. Before you finalize anything make sure that your broker has experience finishing these types of loans in the necessary time period- overruns can cost you time, money, and even the house of your dreams.
What is My Locked Rate?
When you first begin the mortgage process, your mortgage broker will quote you an initial rate. This rate is temporary and contingent upon certain documents being accepted by the bank. Without the bank accepting these documents your loan is not guaranteed, nor is it guaranteed to be at the quoted rate. When your mortgage broker locks your rate you will be guaranteed to have that rate for a 30-60 day period.
What is Your Application Process?
Some lenders have much more stringent lending processes. This is especially true when the borrower has middle of the road credit. These lending processes include a great deal of paperwork and double and triple checking relevant statements. Ensure that your loan officer has their process down- if not it could lead to a loan denial.
Can I Buy down My APR Points?
Sometimes lenders will offer the option to pay down your rate. This means you put a larger amount of cash down up front and they will consequently drop your annual percentage rate. If you have the funds this can end up saving you a tremendous amount of money in interest payments over the life of your loan.
While getting a loan seems easy- it is more complicated than it looks. You have to understand what kind of loan you are applying for when trying to buy a home. The process will be even more complicated if you are a first-time home buyer. You will also need to understand things like your interest rate. The bottom line is that you want to do your homework and ask as many questions as you can to make sure you broker the best deal with your mortgage lender. The best way to make sure you get a good rate is to stay on top of your mortgage broker and never settling for a high rate.