What Questions Should I Ask My Mortgage Lender Before I Sign?

Many real estate agents will recommend a loan officer to you.  It's because they have a working relationship with that person and know they will get the job done.  We know that no one is perfect, but is is important to do your due diligence and talk to the recommended professional even if you have been pre-approved by someone else or have a 'friend' in the business.  

When you speak to the loan officer, ask these 4 important questions:

1. Do you have a variety of loan programs to fit my cash flow and expected length of ownership needs?

If you are going to live in your new home for less than 5 years, you may want to consider an adjustable rate mortgage (ARM).  With an ARM your payments will be lower, but they will go up according to the terms of the loan.  Most people aren't aware that with a standard 30-year mortgage they'll be paying 2-1/2 times the amount in mortgage payments.  If you are going to live in your new home for over 5 years, a traditional fixed rate mortgage may be a better deal.

2.  Do you offer written mortgage pre-approvals and not just pre-qualifications?

A pre-qualification is usually the lender's opinion of your eligibility for a loan.  If you asked to be pre-approved, the lender will actually submit your job and credit history to an underwriter and get a conditional approval for a loan and loan commitment.  The advantage of having a pre-approval is that it will make your offer to buy a home stronger and it will usually allow you to close the deal faster.

3.  Do you have the ability to handle difficult credit history?

Many lenders will only work with you if you have perfect credit, and if a problem comes up they won't help you.  Lenders look at your credit history to figure out how much they will lend you and how much they will charge you to lend it.  Before you make an offer on a home, make sure your lender has reviewed and received approval for you and your specific credit history.

4.  Is the rate that you quoted me the rate I will get at closing?

Lenders may lock in the rate for 45-60 days.  If that offer expires, then it is possible that your rate and monthly payments will be different than in the original lender disclosure. If rates are dropping, that's good.  But if the rates are rising, you will want to find your home and get it closed before your rate lock expires.

To learn more helpful tips or to find out more about what CENTURY 21 Semiao & Associates can do for you, Contact Us!