10 key questions to ask a lender | Real Estate | Smyrna/Vinings News


10 key questions to ask a lender | Real Estate | Smyrna/Vinings News.

1. What is the interest rate on this mortgage? 
2. How many points will I pay? 
3. What are the closing costs? 
4. When can I lock the interest rate?
5. What will my monthly payment be? 
6. What are the down payment requirements for this loan? 
7. What are the qualifying guidelines for this loan? 
8. What documents will I have to provide? 
9. How long will it take to process my loan application? 
10. What are some possible issues that could arise?

 

1. What is the interest rate on this mortgage?
To determine how much you will pay over the life of the loan, you need to know the interest rate. Rates change daily and if your credit is less than perfect you may not qualify for the best possible figure.

The most effective way to compare different offers, ask for the annual percentage rate (APR) which is generally higher than the interest rate. Be aware the APR found in some advertisements may be misleading. Some lenders do not include all of the fees they charge to calculate their APR.

2. How many points will I pay?
Points can also be considered loan origination or loan discount. These fees are charged for an interest rate that is provided. The lower the interest rate the higher the points or origination for the loan.

3. What are the closing costs?
Mortgages come with fees for services provided by lenders and third parties involved in the transaction. There are generally three different portions of closing costs, origination from the lender, attorney fees and pre-paid items which generally includes the cost of setting up your escrow account and pre-paid interest.

4. When can I lock the interest rate?
Interest rates can fluctuate from the time you were provided an initial estimate to the time you are ready to close due to daily rate fluctuation. To stop this from happening you will want to lock into a rate and cost you are comfortable with. A good time to lock is generally when you begin the application process and are ready to proceed with the loan. Each interest rate has a different cost associated with locking in that rate so look at different options.

5. What will my monthly payment be?
Your monthly payment takes into account several different factors, these factors include interest rate, loan amount, are taxes and insurance included and is there PMI on this mortgage. These are key items to understand to have a grasp of what your monthly mortgage payment will be.

6. What are the down payment requirements for this loan? 
There are several different down payment options to be aware of. The minimum down payment is traditionally an FHA mortgage. There are down payments for this program as low as $100 down but standard FHA down payments are 3.5%. Conventional mortgages are generally a better loan option than FHA but require a 5% down payment. If you put less than 20% down you will generally have PMI (private mortgage insurance), which adds to your monthly payment. The more you put down the lower your PMI will be. To obtain the very best loan term you will require a 20% down payment.

7. What are the qualifying guidelines for this loan?
These guidelines are related to your income, employment, attest, liabilities and credit. FHA, VA and other government sponsored mortgage programs usually have easier qualifying guidelines than conventional loans.

8. What documents will I have to provide?
The most common documents required to process your loan are proof of income including pay stubs, W2’s, tax returns, driver’s license and assets. Each situation is a bit different so there may be other documents that are required.

9. How long will it take to process my loan application?
The answer to this question depends on several different variables. When loan volume is high, underwriters get slowed down and this itself can show up the process due to a bottleneck in the pipeline. Generally a good expectation is 30 to 45 days to close your loan.

10. What might delay approval of my loan?
Providing the lender with all documentation and accurate information beginning the process should allow the transaction to run smoothly. Some of the more common concerns are any type of credit problems, issues with the sourcing of funds for your down payment, appraisal problems or being re-conditioned by the underwriter for additional documentation. Be sure to notify the lender if there is any increase or decrease in salary, change in jobs, if you obtain any additional debt or change in marital status between time of application and the loan closing. Any one of these items could cause the loan process to slow down, that is why it is important to get everything possible to your lender up-front to try to avoid these issues.

Joel Lobb (NMLS#57916)
Senior  Loan Officer
502-905-3708 cell
502-813-2795 fax
kentuckyloan@gmail.com

Key Financial Mortgage Co. (NMLS #1800)*
107 South Hurstbourne Parkway*

Louisville, KY 40222*

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3 thoughts on “10 key questions to ask a lender | Real Estate | Smyrna/Vinings News

  1. Pingback: A Complete Guide to Closing Costs | Kentucky First Time Home Buyer Mortgage Loan

  2. Pingback: The Top 5 Questions to Ask Your Lender | Kentucky First Time Home Buyer Mortgage Loan

  3. Pingback: Yes, interest rates are on the uptick – but there is NO cause for panic. | Kentucky First Time Home Buyer Mortgage Loan

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