You have made the decision – it’s time to buy a new home!!! Now what? You have lots of questions – or maybe you think you have questions but you aren’t sure what to ask? I know I have questions for my buyers, but it’s things like what is your comfort level in a house payment, how much money do you have to put down, what is your income? Things like that. So what should you ask your loan officer?
Here are some ideas:
-What types of mortgages do you offer? Most lenders offer conventional and government loans (FHA, VA, Fannie and Freddie – and maybe USDA). But not all lenders may have access to VA or USDA loans. They may also not have access to first time homebuyer loans. Maybe the mortgage company offers the loans, but the loan officer doesn’t work with certain loans. You want to make sure that your loan officer is able to offer you a loan that may work best for you. So ask what options you have. You may also want to follow that question up with one that asks are there mortgage options for me that you do not offer? Such as a first time homebuyer program?
-Can you explain the loan estimate to me? Will you go over all the fees that I will be paying? And does my interest rate include discount points or an origination fee? You want to know what fees are being charged. The loan estimate shows you all the fees that you will be charged, it replaced the good faith estimate a few years ago. Interest rates vary and so does the cost of the rate. In Minnesota some lenders charge an origination fee – it’s another way of paying points. You can lower your interest rate by paying points (or an origination fee). However, you want to make sure it makes sense to pay those points. If you are going to be in the house for a long time, it may make sense! If not, it may not. Your loan officer can give you different options for rates and fees and also break out the payback period. So if you are only in the home for 4-5 years, it doesn’t make sense to pay to lower that rate and have a longer time to recoup that cost.
-Do you charge an application fee? Some lenders charge a fee for the credit report. Some also charge an application fee to cover both the credit report and also administrative fees for starting a new loan. Not every company charges this fee, so it’s something to ask about. Also some lenders collect for the appraisal up front, others wait and collect it at closing. You will want to know if you need to pay for the appraisal upfront so you are prepared. Some buyers are expecting the seller to pay closing costs and may not be prepared to pay for the appraisal.
-Do you charge for locking in my interest rate? Do you have a float down option? I have never charged for locking in interest rates unless it’s a long lock – over 60 days. Many lenders have float down options. With rates as low as they are now, it may not matter but you never know! As rates vary daily, it may help you to lock in knowing that a float down option is available.
-Will I get updates on my loan? How long will it take to get done? These are good questions. The time to finish your loan will vary based on your personal loan – everyone is different. Sometimes it’s a matter of when the appraisal is completed. Appraisals are taking 2-3 weeks now. Those are taking longer than normal just based on the current volume. In my case, underwriting may only take 2 days for a purchase, closer to 4-5 days for a refinance. But once it’s approved, we need to get any conditions and that may take a couple more days. We send out email updates on our files so you know when your file is submitted to underwriting and when it’s approved.
The reality is the best mortgage is different for everyone!! So the loan that is best for you may be different than the loan for your best friend or your brother! Ask questions and hopefully your loan officer is also asking you questions so you get the best mortgage for you!
Leslie Vanderwerf, NMLS ID#335509, Cross Country Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
