Buying a home can be a scary situation. The most important factor (next to finding the home itself) is having the right loan officer to facilitate the loan process correctly and effectively.
We are all a team, so these are a few questions you should ask any loan officer when deciding who to use and what loan program to select!
If you do not have a loan officer yet, please email us and we would be happy to send you some referrals to reputable lenders in the area who are local and know this ever changing market.
- “What is the interest rate that you are offering on the loan?”
- Keep in mind that if the loan is an adjustable or a reset loan, you will want to know: the index, the margin, the initial rate period, the adjustment period, the adjustment period & life of loan caps, the conversion option details, and risk of negative amortization, if any.
- “What are the discount points and loan origination fees on this loan?”
- Will these costs be paid out-of-pocket or added in to the loan amount?
- “What are the anticipated closing costs on this loan?”
- These estimated costs, of which the lender is required by law to provide a good faith estimate. Ask for the total cash amount that will be required – including your down payment and the closing costs.
- “What is your lock-in period on rates and points and how long do you make this commitment?”
- Lock commitments do vary from lender to lender and are important to know while in the house hunting process. Find out if this commitment works both ways if rates and/or points should go down rather than up. They may want to ask the lender if they offer a “float-down” lock-in commitment and what fee they charge for it.
- “Does this loan have any prepayment penalties and how much are they?”
- Most F.N.M.A./F.H.L.M.C. conforming loans, along with F.H.A. and V.A. loans, do not have prepayment penalties – but most second loans do. They may also want to find out for what period of time the lender is able to charge these fees.
- “How much will the total monthly payment be on this loan and what will it include?”
- Find out the total monthly payment which will not only include the principal, interest, taxes and insurance, but also may include H.O.A. fees, mortgage insurance payments, and hazard insurance payments (for such incidences as floods, storms, wildfires, and earthquakes.) It is import to feel comfortable and confident with this financial obligation.
- “What do you consider to be the most important factors in evaluating my credit worthiness?”
- While most lenders use F.I.C.O. scores as the method to evaluate their credit, many lenders also consider payment history, employment, judgments & liens, new credit trade lines, usage of existing credit and cash assets. This is important to know up front.
- “What are the documents you will require me to sign to apply for and to close this loan?”
- The lender should be able to explain all of the documents that the borrower will have to sign through all phases of the loan process.
- “What is your estimated time for processing this loan?”
- Generally, when rates go down, loans take anywhere from 30 to 45 days to process (except short sale & REO transactions); however, some F.H.A. and V.A. loans take longer. Be sure to advise them to get a realistic estimate from the lender. When rates move upward, you can expect a shorter close of escrow, 21 or 25 days. There are still some lenders who can perform in a "quicker" way, but you would need to make it clear the urgency of the timing upfront.
- “What are some typical delays that we could encounter and how can we avoid them?”
- This is also a very important question and a quality lender will give a very direct answer. Many things come up during escrow. It is our job to ensure you are protected and pleased with the results. But it's also nice to have a few scenerios that could come up so you are fully prepared.