No one teaches you how to buy a house, and many of us have learned from trial and error. But the mistakes can cost you big, and you go from owning a home to throwing it back on the market to hopefully recoup some losses. A great broker and sound research can help you avoid the unnecessary stress. Your credit being where it needs to be is just one piece of the puzzle. Think about asking your mortgage lender these relevant and often money-saving questions.
First-Time Home Buyer Questions to Ask Your Mortgage Lender When Buying a Home
Get to know the lender and your financial wellness ahead of time so that you can adequately prepare yourself for the home buying experience.
1. What are the grants and programs available for new homebuyers?
For example, Nevada state has a program available for first-time buyers that will provide down payment and closing costs. There are also grants for newly single mothers.
Related: Take Advantage of These 5 First-Time Homebuyer Programs in Las Vegas
2. Can I be prequalified for the loan?
The amount available to you is based on your income, debt, and assets.
3. What’s the rate for a 30-year fixed mortgage?
When the interest rate remains the same throughout the 30-year loan, it is called a fixed-rate mortgage. In Nevada, the fixed interest rate is 3.83%, but it could be more or less depending on your lender rates.
4. Do you sell mortgages or personal information?
Lenders sell mortgages and only the information related to the loan.
5. Is there a commission attached to the loan?
It is essential to choose a lender who has a customer first rather than commission first mindset. Transparency leads to trust, and it’s harder to fool an informed consumer.
6. Is an FHA loan a better option?
Working class individuals who may need help with low down payment and softer credit requirement can benefit from this type of loan, but anyone can apply.
7. What are the qualifications for the loan?
Ask this question to see if you need any more preparation.
8. What are the documents required for this loan?
This is good to know to get your paperwork in order.
9. How did you arrive at the interest rate?
You can ask to look at the amortization schedule which breaks down the interest and principal payments. This question is also vital in determining if the amount is in your best interest (pun certainly intended).
10. Is the interest rate a fixed- or adjustable-rate mortgage?
Ask this question to know how will the interest rate change over time and what is the most you will have to pay over the course of this loan.
11. What are the discount points?
Also called mortgage points, these are fees paid to the lender for a lower interest rate. If you have the cash to spare, then this could help you in the long run.
12. What are the total closing costs?
This will help you solidify the financial picture associated with your home purchase.
13. Any other costs associated with this loan?
Knowing the fees can help you shop around for a lender that is right for you.
Related: 5 Things Almost Every First-Time Homeowner Forgets to Budget For
14. Can origination fees be removed?
Here is where your negotiation skills come in handy as these fees are there for profit in most cases.
15. Can the mortgage be paid off early?
Some lenders are strict and do not allow early repayment. But many other charge a fee when paying down the mortgage ahead of schedule.
16. What is the difference between homeowners insurance and mortgage insurance?
These are two different types of insurance, and your lender may have competitive rates available.
17. How much, if any, coverage is required?
Some lenders require private mortgage insurance or title insurance.
18. Can they work within your timeline for closings?
Some companies quote you two weeks for closing while other can take three months to close. Choose a lender who can respect your timeline and get everything done.
Related: Buying Your First Home: Timeline and Checklist
19. What is the loan-to-value ratio, and why is it important?
LVT equals the loan amount divided by the purchase amount. This ratio can affect your mortgage approval.
20. Is there a home warranty available?
Lots of things break down in a home and need fixing. This warranty can help deal with those costs.
Being prepared can help your lender provide you with the most beneficial and sustainable loan possible. This way you can focus on creating memories that last a lifetime.
