In the process of buying a new home, shopping for the perfect home isn’t the only shopping you’ll do. And the first step in shopping is getting preapproved for a home loan. That gives you the best idea of what you can shop for. That being established, a large part of shopping for a home loan is shopping for the right mortgage lender. In securing a loan to buy a house, you will have to provide a lot of personal information – and not just about your financial situation. The other side of that coin is that you should also ask the lender plenty of pertinent questions to determine the fit. With that in mind, let’s take a look at the 7 most important things to ask your lender before buying a home.
1. What Kind of Loan Will Be Best?
The first thing you need to ask your lender before buying a house is “What kind of loan will be best for me?” Keep in mind, though, that before your lender can accurately answer that question, the loan officer will need plenty of information about you and your finances. And then you, too, need to ask questions about viable loan options. The most common loan options are:
- Fixed rate
- Adjustable rate
- Interest only
- Negative amortization
2. What Is the Interest Rate?
Of course, one of the most important elements in determining the best kind of loan is the interest rate. You also need to be aware of – and ask about – additional interest rate-related fees that can edge the rate higher than the base rate. If you opt for an adjustable rate mortgage, another important thing to ask your lender about is how often the rate will be adjusted, as well as what the cap is. Keep in mind that each lender has a different structure and so you can get different products and rates from the different lenders.
3. What Is the Annual Percentage Rate (APR)?
Before buying a home in [market-city] or the San Antonio area, you also need to ask your lender about the annual percentage rate (APR). The APR is the rate that incorporates all the additional embedded fees in the loan. Reale state lending experts agree that you should carefully consider discount points included in the APR. This will help you in determining which lender actually has the lowest fees.
4. Will Mortgage Insurance Be Required and What Will It Cost?
Often, if you pay less than 20% down, you’ll have to pay for mortgage insurance (the cost of which is generally passed on to you as a built-in fee in your mortgage) – but not always. So you do need to ask your lender whether mortgage insurance will be required and what the cost is. Before you agree to pay for mortgage insurance, you should, according to financial experts, inquire about “other loan programs that you might qualify for that don’t require mortgage insurance.” Normally a FHA loan will require mortgage insurance as it is a 3.5% down program so that 20% down is not required but the other side is that you will have to pay mortgage insurance on the loan.
5. What About Monthly Payments?
So when you figure in all those fees, your monthly mortgage payment may be higher than the loan amount and interest rate lead you to believe. Be sure, then, to ask your lender exactly what the monthly payments will be before buying a home. Also, ask whether there will be any prepayment penalty for paying off the mortgage early. Also in Texas the property tax is normally escrowed so that payment and the homeowners insurance is added into your monthly payment. It does make it convenient for the lender to pay those items for you as the mortgage company pays those in a way to get the lowest price such as the discounted property tax payment.
6. What Will Be the Additional Costs at Closing?
Closing costs often wind up being a big surprise for many buyers, both the number of costs and the total amount. These fees will, of course, be laid out in the Loan Estimate document and the Closing Disclosure, but you should ask your lender about them beforehand. The lender is required to give the buyer a disclosure of costs and fees within 3 days of taking the loan application. When it is time for the home closing it is a good idea to review that statement against the charges on the closing documents.
7. Will I Be Updated on the Loan’s Progress?
You definitely want to ask your lender before buying a home in[market-city] whether and how you’ll be updated on the loan’s progress. The lender willing to communicate often and by your preferred method (for example, phone, email, or text) will most likely be your best choice. You simply have to know what is going on with your loan because that will, in large part, determine when you can close – the ultimate goal.
Get the Help You Need
As important as these questions are, they are by no means all the questions you need to ask your lender before buying a home in[market-city] and the San Antonio area. The many other considerations include such things as what documents you’ll need, how to get the monthly payment lower, what to do about a low credit score, escrow issues, and more. Basically, this means that you should not try to tackle it all on your own. You will need the knowledge and expertise of a local real estate professional to help you navigate this thorny process. Most agents will have trusted lenders (Find out more here (210) 216-7722.)
And if you are a first time home buyer, the questions you need to ask your lender before buying a home multiply. You’ll also need to, at a minimum, find out about the programs available for first-time buyers. It will vary by area and other factors. First-time buyers can avoid mistakes by asking the right questions and using a good agent and mortgage lender. To find out how we can help you get the answers you need, contact us today at (210) 216-7722.
As the Floresville Real Estate Agent – Faye Y Taylor is here for your questions and to help