Questions for Your Lender
Applying for a mortgage can be overwhelming, but a little planning can go a long way, especially for first-time homebuyers. Homebuyers can make the process easier for themselves and their lender by following a few simple steps.
“A mortgage isn't something you should rush into until you’re ready,” Derek Kramer, BANK Mortgage Loan Expert, stated. “Knowing what questions to ask your lender when you first start the process will ensure you have everything you need as your application progresses.”
When reviewing your mortgage options with your lender, ask these six questions listed below.
What type of mortgage should I apply for? Mortgages come in a variety of shapes and sizes. Which option is best for your scenario is one of the first questions you should ask a lender. While most borrowers will choose for a conventional loan, there are other options. Borrowers with low to moderate income levels, for example, may be eligible for a government-insured loan, which may have less stringent credit standards and require a smaller down payment.
- How much can I borrow? Your loan qualification amount is determined by a number of factors, including your income, debt, employment status, credit history, and so on. All of this information will be taken into account by your lender.
- What is the amount of money I’ll need for a down payment? When it comes to down payments, the magic number is usually 20%. Putting down 20% can result in reduced interest rates and the elimination of the need for mortgage insurance. Minimum down payments, on the other hand, vary depending on the sort of loan you apply for, so talk to your lender about it.
- What interest rate that I am eligible for? This will decide the total amount you’ll pay over the course of the loan, as well as whether you’re financially prepared to proceed with a mortgage application.
- What documents are required? Lenders can give you with a list of documents you’ll need to complete your mortgage application. Tax returns, pay stubs, W-2s, bank statements, and other documents may be included. Knowing what you’ll need ahead of time will help you gather the documentation you’ll need and speed up the procedure for your lender.
- What are my closing costs going to be? A bank will charges a number of fees for a home loan. Origination expenses, appraisal fees, credit report charges, attorney fees, and underwriter fees are all possible closing costs. After you apply, your lender will send you a loan estimate, which will tell you how much you’ll have to pay in closing costs for the loan you've requested.
Other Things to Think About
While the questions listed above are crucial to ask your lender, there are a few other things to consider before beginning the application process.
To begin, make sure your credit is in excellent standing and that you are aware of your credit score, which your lender will use to assess your ability to repay loans. While some government loan options may be accessible for customers with poor credit, many lenders will refuse to lend to someone with a credit score in the low 600s.
Next, strive to reduce as many debts as possible before beginning the mortgage application process to enhance your debt-to-income ratio. Your DTI will be used by your lender to evaluate the amount of mortgage you are eligible for.
More Information
If you are interested in starting a mortgage application or would like more information about applying for a loan, visit www.BANK.bank/home-loans to learn more and to begin your application. At BANK, we make mortgages easy!
