You must talk to your potential broker before you apply for a loan. Inquire about even insignificant things because once you get the loan you have to pay it back for a very long time. You should keep your options open when you are out hunting for a good broker. Your mind and heart have to say yes to a broker before you make commitments. Make sure you discuss everything in detail with your broker if you want good advice. It is vital to tell him about your debts and income openly. Using this information local mortgage broker will be able to find you something that suits your needs.
What type of loan is the best?
Known banks will particularly need to discover more about you before suggesting the loan options. You can’t expect a doctor to propose surgery before doing a thorough examination. So, always select a lender who asks a lot of questions from you to understand your needs and financial standing. You should question him too about the loan possibilities. Ask him about fixed-rate loans, interest-only loans, adjustable-rate loans, and negative amortization loans. The objective is to find out what type will suit you the best.
Can you talk about the interest rate?
The annual percentage rate (APR) or the interest rate is calculated after a series of calculations. It is a complex calculation that also takes into account the interest rate and other fees if involved. Different companies have different methods to calculate the annual percentage rate. Furthermore, there’s no accurate way to calculate the APR for the adjustable mortgage. This is why it is extremely important to discuss this matter with your lender. You need to exactly what you are going to pay for several years.
How much is the down payment?
You must be aware of what you have to pay upfront as a down payment. Generally, the lender says it’s about 20 percent. If you have a high score and well qualified, then the rate can be reduced up to 3% only. Your qualification score depends on your financial position. If you have other loans on your annual income, then from the broker’s perspective it shows that giving you a loan can be risky. The only drawback can be an increased payment if you fail to pay 20%. You have to pay it till you reach a balance of 80/20 percent.
What are the expected costs?
The cost of a loan is a composition of several things. That may include the loan amount in addition to third party fees and taxes. You must be aware of all these costs and everything should be mentioned on the loan estimate document. The lender has to provide this document under federal law. This particular document has your name on it along with the social security number and address. The broker hands it over to you once the application process is complete.
What happens if the monthly payment is skipped?
This question has far greater concern than it seems. If a payment is skipped the broker adds up a penalty in addition to the payment fee. In some states, the penalties are not allowed anymore but in some states, it still exists. So it is better to stay clear and ask about it. The broker can add up to six months’ interest if you pay an annual installment. Some penalties are applied only in the first two to five years, starting when you took the loan.
How long the process will take?
You must inquire about how long will it take if you already behind the schedule to buy a home. Usually, the processing time is about 43 days. Don’t forget to add the closing date to write a purchase contract. Later you may have to check it with your broker’s date. Try to find out if any of the expected issues can stop your processing momentarily. Never forget to inquire about the expected date of the fund release once the application is approved.
Can you assure on-time closings?
It is a known fact that closing the transaction is a complex matter. The purchase contract has the closing date on it but mostly it depends on your broker’s ability to close it in time. You may have to pay the additional cost later if your broker fails to do it for some reason. You must share your concerns about these costs and do ask if the interest rate will be increased after the lock-in expires.
There are a lot of questions except these that you ask from a broker. The probable reason for that is the diversity of the situation. Different people can have several types of financial problems or bounds that can become a barrier for you to get the loan. The lead time is very important to plan your purchase so make sure you prepare all the documents correctly, so you don’t have to waste your time on rework.