Questions to Ask when Looking for A Mortgage

  Purchasing a house for most people also means applying for a mortgage. You want to choose a mortgage lender that gathers relevant data from your financial records before recommending any type of loan. You generally want to ask the lender to explain the pluses and minuses of the various kinds of mortgages you can apply for. Here are some more questions you can ask your mortgage lender to make sure you get the proper financing for your home.

Ask About the Cost of the Mortgage

Make sure you ask about all the fees associated with your mortgage. The cost of the loan includes the fees that the lender charges, the appraisal fee, the credit report fee, the lender's title policy, the past inspection report, escrow fees, title fees and any applicable taxes.  You'll also want to ask about origination fees and discount points. Each point is equal to 1 percent of the loan amount. If you're charged two points on a $100,000 loan, that would be a total of $2,000. These points might be paid in part by the seller and are also tax-deductible.  Ask your lender what the interest rate is and the annual percentage rate of the loan. These factors influence your overall carrying cost of the loan.

Ask if Your Lender is Big or Small

Ask your mortgage provider what kind of lending institution it is. A deciding factor when choosing between a big and a small lender is how much control you want the lender to have over the process. You probably should be looking for a direct lender instead of a big bank. A direct lender has more control over the course of your loan and can process it with a faster return time. These are the benefits that come with working with a lender that does almost everything in-house. You'll also have the benefit of working with a broker whom you can ask questions of directly relating to the mortgage approval process.

Ask How Experienced Your Lender Is

You want to ask what programs your lender has experience writing loans for. There isn't one type of mortgage that will fit every type of applicant. For example, if you are a veteran, you want to deal with people experienced servicing veterans and who can do VA loans. If you're looking for down payment assistance, then you'll have to work with an approved lender. You want to make sure that whatever lending institution you're looking at has the options that would be appropriate for you. The best thing you can do is ask your lending institution what programs it specializes in to try to make an assessment whether it is a good match for you. If you're looking to qualify for some obscure provisions like 203k or USDA, then you will likely have to call around to find your mortgage lending match. USDA loans, which are available to residents in rural areas with moderate to low incomes, are a particularly good deal, they offer 100 percent financing without a down payment.

Ask How the Appraisal Process Works

Ask your potential lender how its loan appraisal process works. You don't want to get stuck with a lender that always chooses the lowest bidder. You want a round-robin pool of appraisers or even the option to choose a particular appraiser. Smaller pools are ideal if that means you are going to get local appraisers who are familiar with the housing prices in your area. Local appraisers can also help speed along the mortgage process by getting back to you within a reasonable amount of time.