by Anthony Kellum
The complexity of buying a home can make for a confusing and daunting homebuying process. According to a recent survey “49 percent of those polled said they were intimidated by the steps to buying or selling, and 44 percent said they wouldn’t even know where to start.” If you’re beginning your home buying journey, you may feel like you don’t know what you don’t know. Kellum Mortgage, LLC is here to help. We’ve compiled a list of questions to ask a mortgage broker as you search for a lending partner. This list will help you get the ball rolling and keep you on track.
Five Questions to Ask Mortgage lenders
How do I get pre-approved for a mortgage loan?
Pre-approval is one of the first steps on your homebuying journey. It shows you how much house you can qualify for, and it shows the seller that you are a serious buyer. Therefore, it’s important to know exactly what’s required of you. Asking a lender will give you a more specific answer, but in general, seeking pre-approval will result in an analysis of your:
- Debt-to-income ratio: Lenders look at your monthly payments and your gross monthly income to determine your ability to pay back the money you plan to borrow.
- Loan-to-value ratio: Lenders compare the amount of your mortgage loan with athe appraised value of the property you are looking to purchase.
- Credit history: Your credit history helps lenders determine how likely you are to pay back your loan.
FICO score: Your FICO score is based on your credit report and is another indicator that lenders review. Typically, the higher your FICO score the lower your interest rate.
- Income and employment history: As with many of the other factors analyzed by mortgage brokers, your income and employment history can assure lenders of your ability to repay your loan.
What are your rates and fees?
The actual purchase of your home is just one of the many prices to take into consideration during the homebuying process. Lenders charge for various thigs throughout the loan process and it’s important to understand what all the mortgage “ling” means. Ask your lender for a comprehensive list of what you’ll pay for, including an origination fee. Ensure the lender provides you with the loan coast for working with them specifically.
What are my options for a down payment?
Your down payment represents a portion of the total coast of the property. You will finance the remaining cost through your mortgage loan. Different loan types require varying down payments. Ask the lenders you’re interviewing how much you need to put down and if that number is adjustable. If coming up with a down payment is an obstacle, ask the lenders about down payment assistance programs. You’ll fid that several loans programs require less than20 percent of the home’s value for a down payment. Another way to tackle this question is to ask what money you’ll need for closing This could answer some other questions as well.
What types of loans are available?
Speaking of loan options, it’s important to know what loans are available and which loan makes the most sense for you. Common loan types include fixed and adjustable-rate loans. However, you may qualify for a VA, or FHA mortgage, which would allow you to put a lower percentage down at closing.
Is there a prepayment penalty? If so, what is the penalty?
This question allows you to determine whether paying off your mortgage early will result I additional fees. Some lenders charge a fee if you pay off your loan before it’s due. For example, these fees make it more appealing for borrowers to pay their loans back slowly, allowing the lender to gain more in interest. When possible, avoid these penalties.
Use the questions above to talk with mortgage brokers, lending institutions, banks, and discover your best loan option and lending partner.