What You Need to Ask Your Mortgage Lender


by Sean A. Kelly - Date: 2010-11-09 - Word Count: 622 Share This!

If you are on the market for a home loan to purchase your very first home, then you probably need to look for a good mortgage lender. Taking up home financing is a very big deal as it involves a large sum of money and you may be tied to it for decades. So taking it from a trusted and reliable mortgage lender may be a good idea. While there are hundreds of ways to borrow enough money for you to become a home owner, there are also many ways for unscrupulous lenders to take full advantage of you, through hidden fees and penalties, which may cause you to pay more money than you should. A reputable lender may try to explain everything to you about the loan you are taking and also to present to you other home mortgage loans available. However, even the best of them could have missed out some things like special conditions, terms and hidden fees. That is why you need to arm yourself with at least some basic knowledge about home loans before you seek out a financial institution or a bank to apply for a loan.

When you choose mortgage companies, it could also be important that you check their reputation and track record. Other than that, you may be more well prepared by arming yourself with some questions to ask the lender before you decide on taking the loan. It is always wiser to ask a lot of questions and leave no stone unturned when it comes to taking up such a huge commitment. Here are some of the information that you may need when applying for a home mortgage:

● The mortgage interest rate that you need to pay.

● The annual percentage rate (APR) including fees, points and mortgage insurance.

● If you are looking at an adjustable rate mortgage, you may need to know the initial interest rate, how high the rate could go up to, what are the annual and lifetime caps on the interest rate and payment, how often is the rate adjusted, what index the rate is based on and the margin that is added to the index.

● The requirement for credit life insurance and how much would you need to pay if you don't take up the insurance.

● Will you be penalised if you pre-pay the loan and how much penalty you may need to pay.

● Will you be able to make extra payments towards the principal amount.

● Is there an option for you to get an interest rate lock-in which guarantees interest rate for a period of time and if so, will you be able to get it in writing and when you get lock-in rate, is it applicable at the time of application or at the time of approval.

● Will you be able to get a lower rate lock-in if rates were to drop.

● Requirements such as inspections and surveys of the property you plan to buy.

● The extra costs in terms of hidden fees that you may need to pay.

● The cost of a title search or title insurance, if required.

● An estimated amount of the total cost of taking up the loan.

● The taxes you may have to pay such as state taxes, local taxes, stamp taxes and transfer taxes.

When you ask these questions, the lender may not like it at all. However, you you have the right to ask. After all, we are talking about tens of thousands of dollars, if not hundreds of thousands. Taking up a $150,000 loan means even a 1% difference in interest rate could cost you a lot of money. If you need further assistance, you can always get your mortgage real estate agent to give you some ideas and suggestions.


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