5 Questions to Ask a Prospective Mortgage Lender

It is tempting to think of obtaining a mortgage as a daunting process that requires time, effort and energy beyond calculation. And it might be that way if you try to go it alone and don’t work with the expert guidance of a Mortgage Broker. When considering who to visit for help when you are ready to get your next (or first) mortgage, you can more easily vet a potential mortgage broker or mortgage lender by asking the right questions. 

To help you find the right direction for your mortgage process, we compiled a list of the right questions to ask to understand the real deal and be certain that your next mortgage is the best deal for you. Here is a list of five good questions to ask any prospective mortgage provider, be it a broker or lender.

Ask These Questions of Your Potential Mortgage Broker or Lender

1. How do I get pre-approved for a mortgage?
   Obtaining pre-approval is virtually a must these days if you are in the house hunt. Mortgage pre-approval both helps quantify the amount of house that you can afford and demonstrates to the seller that you are serious about buying. Starting out with pre-approval means that you begin the entire mortgage process on the right foot, with a helpful understanding of what you can afford.
   
   While each pre-approval process may be slightly different between mortgage lenders, generally a pre-approval is a result of a review of your debt-to-income ratio, loan-to-value (LTV) ratio, FICO score and overall credit history. Last but not least, you will also provide information about income, including employment history. An added bonus is that this information can lay the groundwork for the mortgage process by establishing details and information up front. Make sure that your next mortgage lender is able to provide you with a path to pre-approval.
   
2. What are the options for a down payment?
   The down payment is a sum of money that the buyer pays to purchase a property. Your down payment will likely represent only a portion of the purchase price of the home. The remaining costs are what is financed through the mortgage. The actual amount required will vary depending upon the the loan amount and requirements. Some loans require no money down, while others will require up to 20% down.
   
   Your down payment traditionally represents the largest portion of the closing costs. Asking what the closing costs will be for your loan is another way to ask about the down payment amount since this will be included in the overall calculation for your closing costs. If finding the money for a down payment is an obstacle, there are some down payment assistance programs available or you can opt for the right loan type, if you qualify.
   
3. What are your fees?
   While the price of the home that you’re about to purchase may come with a little sticker shock these days, there are other costs associated with purchasing a home. Mortgage lenders will charge various fees to help them profit from your mortgage. While it can seem worthwhile to roll these fees into the loan, you can end up paying a lot of money over the life of the loan for an otherwise avoidable fee. Make sure to ask any prospective mortgage brokers or lenders for a comprehensive list of fees. This list should include common fees that are nearly identical across providers, but may include excess fees that can be compared with other offers.
   
4. What are my options when it comes to what loans I qualify for?
   It is always a good idea to know all of your options when it comes to a mortgage or almost anything else in your life, for that matter. Knowing the differences between mortgage types can help you settle on the best path forward. Qualifying for a VA or FHA loan can result in lower down payments, lower costs over the life of the loan, and other advantages. There are also other options for unique situations and creative solutions to financing issues. Always ask your mortgage broker for the loan types that you qualify for as well as their suggestion on the best path forward.
   
5. Is there a prepayment penalty?
   A 15 or 30 year term can seem like an eon of time. Paying the loan off early delivers a serious sense of financial freedom. Asking any mortgage broker or mortgage lender about a prepayment penalty is just a good practice. Sometimes, paying a mortgage off early can result in additional fees. This can even be true for a simple refinance. Asking this question up front will avoid you being locked into a loan that you cannot pay off early without taking a financial hit.

When you are ready to investigate a mortgage broker or mortgage lender, use the questions above to help determine the best choice for you. These questions establish answers to important details for the mortgage process. Failing to ask the above questions can result in costs that could otherwise have been easily avoided. Since purchasing a home is likely the largest purchase you will ever make, don’t just go it alone. Work with the experts at Range Lending to help you navigate the mortgage process, it can truly help you save both time and money.