Loan terms, rates and products can vary significantly from one lending company to the next.
General Questions:
Loan – Specific Questions
- What are the most popular mortgages you offer? Why are they so popular? The answer to this question will tell you if you are working with the a lender who is familiar with the product, type of loan, that is best for you.
- Are your rates, terms, fees, and closing costs negotiable? In addition to other fees that are not negotiable, some of these origination fees can be negotiated. I once heard of a customer paying up to $6,000 in origination fees because they didn’t know to ask or do some homework to find out that they paid three times more than the average fee.
- Do you offer discounts for inspections, homeownership classes or automatic payment set-up? This is typical, but doesn’t hurt to ask.
- Will I have to buy private mortgage insurance, also called PMI? If so, how much will it cost and how long will it be required? This is a type of insurance conventional mortgage lenders require when homebuyers put down less than 20 percent of the home’s purchase price.
- What escrow requirements do you have? After you purchase a home, your lender may establish an escrow account to pay for your taxes and insurance. After closing, your lender (or mortgage servicer, if your lender isn’t servicing your loan) takes a portion of your monthly mortgage payment and holds it in the escrow account until your tax and insurance payments are due.
- What kind of bill-pay options do you offer? Online bill pay service, offered by many banks and credit unions, makes it easier to organize your bills and pay them when they’re due. If you juggle rent or a mortgage, cable and electricity bills, credit card payments and more, online bill pay can save time and help you avoid late fees
- What will be included in my mortgage payment (homeowner’s insurance, property taxes, etc.)?
- Which type of mortgage plan would you recommend for my situation? Speak to a couple different mortgage companies to compare the products they are recommending for you and then compare the different costs of doing business. I like to call this comparing apples to apples.
- How long will the rate on this loan be locked-in? Will I be able to obtain a lower rate if the market rate drops during the lock-in period? When you lock your rate, it’ll be locked for a specified period of time. The exact lock period varies based on your loan type, where you live, and the lender you choose. Most rate locks have a lock period of 15 to 60 days. If the rate lock expires before your loan closes, you may have the option to pay a fee to extend the lock period
- How long will the loan approval process take? Typically anywhere between 15-45 days.
- How long will it take to close the loan? Typically anywhere between 30-45 days.
- Are there any charges or penalties for prepaying this loan? This is an important one! Lenders make money from the interest they charge on loans. When you prepay a loan, the lender doesn’t earn as much interest, so they may charge you a prepayment fee. So, if you plan on winning the lottery, find out if you use your winnings to pay off your home early , if there is a penalty.
- How much will I be paying in total over the life of this loan? This is probably one of the questions most people prefer not to ask, but it’s important when you are comparing lenders. Remember always compare apples to apples. You want to make sure the “great interest rate” you are getting won’t end up costing you more money in the long run.
