Mortgage Questions to Ask Lenders in Massachusetts
Author Bill Gassett owns Maximum Real Estate Exposure.
Applying for the right mortgage is an important step in the buying process. Your choice of home loan could mean a difference of thousands of dollars until you’ve repaid the mortgage.
But what are the best questions to ask mortgage lenders? We will review the mortgage questions to help you decide on the best home loan.
Which Mortgage is Right for Me?
When you ask a question like this, you will find out if you are talking to someone only looking to make a sale or trying to help you. This is one of the most important mortgage questions to help you decide on the best home loan.
The advisor should take you through each loan type, giving you the pros and cons of your circumstances.
How Much is the Down Payment?
Lenders like to see a down payment of 20%, but you can often get a loan with less. Down payments of just 3% are possible, and you might even qualify for zero down in some situations.
The lender should explain your options and the drawbacks to lower down payments. Most buyers don't even realize that the average down payment for a first-time buyer is around 6 percent.
Many potential buyers are conditioned to believe they need much more money.
What Interest Rate Will I Pay?
While the interest rate on the mortgage might seem straightforward, lenders can add additional fees to make their rate appear better than it is. Speaking to a few lenders will give you a better understanding of the rate you can expect and your monthly payments.
When looking at adjustable-rate mortgages, you’ll need to know how often the rate will be adjusted and by how much.
When you speak to multiple lenders, getting the best home loan will be easier.
What is the APR?
The annual percentage rate includes all the fees the lender will charge yearly on the loan. If you buy discount points to lower the interest rate, are they included in the APR? They shouldn’t be included in the APR, but it’s best to check.
Will I Qualify for Down Payment Assistance?
There are down payment assistance programs on the local, state, and national levels that you could qualify for. The lender should know what is available and help you qualify.
Are You Doing a Hard Inquiry on My Credit Report?
Lenders need to check your credit history, and a hard inquiry can negatively affect your credit score slightly. Though, if you make multiple applications for the same type of credit over a few weeks, it will only count as one inquiry.
This allows you to compare lenders without seriously damaging your credit score. It is always essential for potential buyers to know how to improve their credit scoring.
Are There Charges to Lock the Interest Rate?
You might want to lock in the interest rate when you've found the right loan. There normally isn’t a charge for this, but some lenders might add it to their fees.
What Will I Pay Each Month?
You need to make sure you are comfortable with your monthly payment. You should also find out if there is an early payment penalty, and hopefully, there isn’t.
How Much Will the Mortgage Insurance Cost?
If you have a down payment of less than 20%, you will usually be required to pay private mortgage insurance.
You can stop paying this when you have 20% equity in the home, but until then, you’ll want to know how much it adds to your mortgage payments.
Will There be Updates on the Progress of the Loan?
Will they update you on how much you have paid and what remains on the principal? Will there be someone you can contact or an online portal to give you this information?
What are Your Lender Fees?
The lender might have origination and other fees for setting up the home loan. You need to know what these are to compare lenders fairly.
What Other Fees Will I Need to Pay at Closing?
The title company and the appraiser will charge additional fees, and property taxes will be due at closing. While these costs will be detailed in the loan estimate, knowing what you must pay early on isn't a bad idea.
Does the Paperwork Need to be Signed in Person?
The lender might offer e-closing, which should be faster than signing in person. It’s also normally a more transparent process where signatures are unlikely to be missed where they are needed.
How Long Will the Loan Take to Close?
You will want to know the expected closing date to prepare to move and make other arrangements.
The lender should also tell you what you should avoid doing that could change your eligibility for the loan before closing. For instance, you should avoid taking out new loans that could change your debt-to-income ratio.
Final Thoughts on Questions to Ask Lenders
The better prepared you are to purchase your first home, the more likely the process will go smoothly. Hopefully, you are now better educated on the home loan process.
Did you enjoy this advice on questions to ask a mortgage lender when buying a house in Massachusetts? See other real estate articles on NewsBreak for more timely tips and advice. Bill often writes about general real estate, mortgages, finance, moving, and home improvement.