Here are 7 important questions you should ask your mortgage advisor. Geared toward First Time home buyer questions, but important to anyone buying a house. Get the right mortgage loan questions and answers the first time you meet with your lender.
What questions should you be asking your lender?
Buying a home can be overwhelming, especially for first-time home buyers.
I provided a Buyer Checklist. It'll take you to it, print it out, take it with you, keep it with you, so you're doing everything that you need to do to get to the closing table.
One of the steps is getting pre-approved for your loan.
And these are the questions you should be asking and writing down so that you can discuss it with your buyer agent.
1-What type of loans do they offer and which one is the best fit for you and your needs?
This is important information when you're purchasing a property because certain loans have limitations on what they will allow if the home needs repairs.
For an example, you're looking at a foreclosed property. It has broken water pipes, it's been disclosed, but the lender is not willing to do any repairs to the property, nor will they allow the buyer to do any repairs. One of the loan requirements for FHA is the home has to be habitable. So not only are you qualifying for your loan, you need to discuss with your realtor as to whether that home you want to look at is going to qualify for your loan.
There are rehab-type loans that are available, that you could discuss with your lender. But does that lender offer that?
So back to the first question, what loan types do you offer, and how are they gonna benefit me?
2-How long is the rate you have quoted me good for?
Interest rates change daily, so in order to take advantage of a really low interest rate that is happening at this particular time, you need to get pre-approved for your loan so that the lender can lock that loan percentage in, and there's no penalties to you to take advantage of it later.
So the timeframe in which they're able to lock in your rate is how long you have to get to closing, not to find a property.
So if your interest rate is only good for three months, you have two months to find your home at a bare minimum, because it can take 30 to 45 days to close on a loan.
3-How long is it before the loan can close?
Mr. Lender, I have found the property I would like to buy, if I made an offer on it today, how soon could we close on it?
4-Is going to be whether you need mortgage insurance or not?
When you're purchasing a property, you have to take into account your property taxes, how much your mortgage insurance is, how much is your homeowner's insurance? Things of that sort that you have to pay on a yearly basis. Those are numbers that have to be paid in order to protect you and the lender. But with that protection comes a hefty monthly addition to your mortgage.
Mortgage insurance is not the same thing as homeowner's insurance, your homeowner's insurance is it protects you against fire, mortgage insurance protects the mortgager if you default on your loan. Loans that are 80% or more of the value of the home, require mortgage insurance.
5- You're also going to want to ask your lender, if the mortgage insurance drops off, once you have hit 80% or less of your loan to value?
6- How much can I ask the seller to contribute towards my closing costs?
The percentage that they give you is the maximum amount that you can ask the seller to contribute towards your closing costs. And that percentage is based on the sales price. I cannot stress how important this number is to you and your realtor, because when you are ready to purchase your property, you need to know how much your closing costs are, and how much of that you can ask the seller for if you don't have enough.
Now, I will make a note here that just because they say that you can ask for up to 6% in closing assistance on the seller side, it's not likely that you're going to get 6% in my area. The average amount that the sellers are willing to contribute toward buyer closing costs is 3%. That includes banks. So foreclosures, almost all of them will offer a 3% in closing assistance, if it is an owner-occupant making the offer, you just have to make sure you put that in your negotiations upfront that you're requesting 3%.
Now. I wanna point out these are in no particular order. They are all something you should ask when you are getting pre-qualified or pre-approved for the loan to purchase your property. And the last one I'm gonna point out today is
7- How much are your closing osts and your down payment? These numbers are very, very important.
They are important because you need to know how much you need to bring to the table. And how much of that, if any, can you ask the seller to contribute towards? So if you have not gone through the steps to get pre-approved, you're not going to know the percentage that you can ask the sellers assistance for.
Think about it, if you're making that offer and you ask for the 3% and you actually need 4 ,you may not be able to purchase the property.
