What to ask a lender?

By RealtyCrunch IncApril, 27th 2020
What to ask a lender?

We’ve outlined the best questions to ask a lender when choosing a vendor for your loan.

Which Type of Loan Is Best for You?

You want to make sure you’re dealing with a reputable lender and that they know everything about you to suggest the optimal loan. Helping you navigate the murky waters between a fixed-term loan and adjustable rate loan.

What Is the Interest Rate and Annual Percentage Rate?

There are two different types of of rates when dealing with Lenders. The interest rate is the rate you’re getting charged for the mortgage. The annual percentage rate (APR) is higher because it factors in the base rate of the interest plus the closing cost associated with the loan.

How Much of a Down Payment Is Required?

Normally a 20% down payment is required with home buying. However, if you’re well qualified you can put down as little as 3% with different types of loans.

What Are the Discount Points and Origination Fees?

Each discount point is equal to 1% of the loan amount. (I.E. 3 points on a $200,000 loan would cost you $6,000)....Some lenders might charge origination fees which are upfront fees charges for processing a mortgage loan application.

What Are All the Costs?

Cost of a loan includes lenders fees as well as third-party vendor fees.

Can You Get a Loan Rate Lock?

Once you’ve decided on the lender, you may want to lock in your interest rate at some point to make sure it doesn’t go up. However, keep in mind typically there is a lock only for a certain time window. You do need to close your transaction by then!

Is There a Prepayment Penalty?

In some situations, the lender could collect an additional six months of unearned interest if you pay your loan off early.

Is the Lender Equipped to Approve Loans In-House?

Underwriters review loans, then issue conditions before approving or rejecting them. If the underwriting can happen in house, it can help with the timeline of the loan.

How Much Time Do You Need to Fund?

The average loan processing time is around 43 days.

Do You Guarantee On-Time Closings?

Ensuring your transaction closes on time is a big issue. This is because your purchase contract will include that date to close escrow which can mean extra cost or problems if that can’t be delivered on time.

What Will I Get Charged For From A Servicing Perspective?

Understanding the fee for collecting and processing your payment and handling your escrow account after your loan closes. Also making sure no hidden fees come up. Typically your lender will be able to provider you a detailed accounting letter that gives you insight into EVERY fee you would pay at closing!

Will I have to pay mortgage insurance?

If you are paying less than 20% down payment, you’ll probably need to get PMI insurance.

Do you have an origination fee?

This is a payment associated with providing services handling the processing with taking out a loan.

How — and how often — will I be updated on the loan’s progress?

Knowing that you have a single point of contact throughout the mortgage loan process. Also what’s the best way you’ll be able to reach that person.