If you’re considering a mortgage loan, always ask your potential lender questions. Your life can depend on the answers you get, from unexpected fees to what type of loan will work best for you. Should you not be satisfied with the answers you receive, keep shopping until you find a lender or mortgage broker you trust. It’s also important to remember that a broker will be able to provide you with better advice, assistance, and accurate information if he or she knows more about you.
It is important that you provide all the information the lender needs, including permission for the lender to run your credit report. You may be certain that Link Advance will take all necessary measures to ensure that your loan is approved and approved swiftly.
1. What Type of Loan Is Right for You?
It is particularly important for reliable lenders to find out more about you before denying your loan request. Choose a broker who obtains enough information about your situation before recommending a loan type, just as you wouldn’t expect a doctor to suggest surgery before assessing your health situation. Consider your personal circumstances when choosing a loan type, and inquire about how each option fits in with your fixed-rate, adjustable-rate, interest-only, or negative amortization loan.
A fixed-rate mortgage has a fixed interest rate, which means that you will know what your monthly payment will be until the end of your term. In the first five years of an adjustable mortgage, the rate can fluctuate based on the market, but it is usually not a major change. At some point, all the principal balance will be repaid in a “balloon payment” on an interest-only loan. The interest will be your only payment in the meantime. It is possible to defer some portion of interest on a negative amortization loan. In order to determine which option is right for you and your personal financial situation, you should speak with your lender and ask questions.
2. How Do Interest Rates and Annual Percentages Work?
APRs are calculated by multiplying interest rates and other lender fees by the loan’s term to arrive at the annual percentage rate (APR). In an adjustable mortgage, an APR rate cannot be accurately calculated because not all brokers calculate it the same way. Early payoffs are also not taken into account in an APR. You should ask your mortgage lender about determining the adjustment frequency, the highest rate, index, and margin if your interest rate is adjustable.
3. Is there a down payment required?
This question is commonly answered with 20%, but it isn’t always mandatory. Depending on your qualifications, you might have the option of paying as little as 3% with some types of loans, but this has pros and cons, so make sure you look into all your options. In the case of less than 20% down, private mortgage insurance is likely to be required. Depending on your loan-to-value ratio, this may result in more closing costs and a higher monthly payment. If you have 20% equity in your home, lenders will typically offer you the lowest interest rates.
4. How Do Discount Points and Origination Fees Work?
There are 1% discount points on each loan. If you want to borrow $100,000, you would have to pay $2000 in points. You can lower your interest rate by paying more points since they are tax-deductible. For mortgage loan applications, lenders occasionally charge origination fees. There is generally an increase between 0.5% and 1% in these fees, referred to as “lender fees.”. Find out the specifics of your lender’s origination fee percentage and discount points.
5. How Much Does It Cost?
As part of the loan cost, lenders also use third-party vendors to perform appraisals, credit reports, title policies, pest inspection reports, escrows and recording fees, as well as taxes. According to federal law, a broker must provide you with a loan estimate that accurately estimates these fees.
Upon completion of an application, lenders must supply the Loan Estimate to the borrower. This document should contain the borrower’s name, Social Security number, property address, estimated property value, loan amount, and borrower’s income. Before applying for the loan, however, you should request an estimate of these costs.
6. Is it possible to lock your loan rate?
In the event that interest rates rise, you may want to lock in your loan. Interest rates fluctuate and change daily, so if you suspect that they are going up, you may want to lock in your loan. For the purpose of locking in a loan rate, lenders usually charge up to one point. To avoid surprises, find out whether they charge a fee if you’re protected from any loan costs, if the rate is locked in for a specified period, and if you’ll receive a written copy of the lock-in. You can also pay the current rate and points.
7. Is the lender capable of approving loans internally?
A loan is reviewed by an underwriter, who issues conditions afterward before approving or rejecting it. You should find out if the underwriting is handled by your lender or if it is outsourced. Some lenders provide automatic approvals or disapprovals without sending the loan to the VA or FHA, which usually take longer to process.
8. What is the timeframe for funding?
Loans are typically processed within 43 days on average. To write a proper purchase contract, you need to include a closing date, so you should coordinate it with your lender. You should ask about the expected turnaround time. Learn whether there will be any delays in closing, and how long it will take the loan to fund after the final application approval.