Having your dream home in front of your eyes is one of the most exciting experiences, but it is not a simple thing to achieve. Before you make up your mind to buy a home, it is of utmost importance to look for the perfect property. You need to spend some time with the mortgage lenders to decide how to finance your home. Once you have opted for a mortgage lender, explain him your financial situation. Inform about your monthly income and other expenses.
There are certain questions, which you can ask your lender just to ensure that you are getting the best rate.
Interest rate: Do not hesitate to shop for the best interest rate in the market. Keep negotiating for it until you are comfortable. If you want to make for a smaller monthly payment, you must go for a loan with lower interest rate.
Locking the interest rate: Although interest rates may vary, yet you can ask your lender to lower the interest rate for you. Keep this in your mind that lenders will generally offer lower interest rates for short-term and high interest rates for long-term locks.
Monthly payment: Once you have built up your budget for your new home, ask your lender for the monthly mortgage payment so that you can make sure that you can afford it. You must also consider the short-term financial goals and long-term retirement goals.
Ask for any prepayment penalties: If you have planned to make extra mortgage payments so that you can pay your mortgage early, you might have to pay a fee.
Qualifying for the loan: You must check your credit history thoroughly before applying for any mortgage. It is your credit report that will include your bill payment history and the debts in comparison to your income.
Minimum down payment required – Keep this in your mind that the loans with lower down payments cost more. Thus, you must ask your lender about the down payment which you need to make for your mortgage.
Ask if the loan is fixed rate or adjustable rate: Fixed rate loans include the same rate for the life of the loan while ARMs include the interest rates that change after a certain period. So, choose the type of loan carefully after calculating your monthly payment.
Reasons for delay in closing: If you want to avoid the delays, you must stay in touch with your lender.
Reason for selecting this loan: After going through your credit history and your monthly income, the lender will search a home loan for you, which will perfectly suit your budget. However, you have the right to know why he has chosen such a loan for you.
Documents required for loan approval: The lender will ask for your bank statements and proof of your assets and liabilities. Ask for other requirements so that it will surely help in speeding up your process.
Time required for processing the loan: Ask your lender about how much time it will take to process your loan. Do not make it too much early to settle on a property.
Any other costs or fees you must be aware of: Try to get as much information from your lender as possible as it will make you more prepared in case you come across some unexpected expenses.
Ask lender for the person who will service your loan: Some lenders usually sell their loans and the right to service them. You have the right to know about the details of your servicer who will receive your monthly payment. You can contact him in case you are feeling problem in paying your mortgage on time.
Ask for other mortgage products with lower interest rates: Depending upon your monthly income, the lender might probably offer you more than one type of loan. Therefore, you must talk about it to your lender.
Get informed about the mortgage insurance: Mortgage insurance premiums can be expensive sometimes. Thus, it is important that you must be aware of it.