Purchasing a house is one of the biggest investments you will make in your life! Finding the right mortgage lender to go through is just as important as finding a home. They are the ones financing your purchase and making it possible.
As you meet with your lender, make sure you are asking as many questions as possible.
1. Which Mortgage Option Is Best For Me?
There are a few different mortgage options which cater to people’s needs. Depending on what you can afford if you are retired and if you want to be able to make extra payments throughout the year, you will have many mortgage options.
2. How Much Down Payment Is Required?
Most lenders will encourage you to put a higher payment down, like 20% of the price (if you can afford it). Otherwise, 5% is required on the first $500,000 and 10% on the remaining amount. If you are purchasing a condo, some condos will require a higher down payment than 5%. But your lender can help you accordingly.
3. What Is The Interest Rate?
This may seem like an obvious question to ask, but it is important. Different lenders will offer different rates. Your credit score can also affect the interest rate you are charged. If your credit is poor, expect it to be higher.
4. What Will My Monthly Mortgage Payments Be?
Asking your lender to give you a definite answer of what you will need to budget for every month will be helpful in getting started. They can easily calculate estimates for you, depending on which mortgage rate and term you decide on.
5. Will There Be A Prepayment Penalty?
If your mortgage is closed, there will be no option for prepayments, which means you cannot put money towards your mortgage whenever you please. If you would like to make extra payments, ask your lender what your options are so you will not be charged a fee. Make sure they tell you how much extra you can pay, because there will be a limit even as an open mortgage.
6. When Will The Closing Date Be?
A lot of different factors will play into when the closing date will be, but your lender should be able to give you an estimate. Ask what kinds of things could delay the closing date.
7. What Other Fees Will Be Included?
There will be extra costs associated with your loan like:
- Appraisal fees
- Legal fees
- Credit report
- Recording fees
Ask for an estimate so you can budget for these extra costs and not come across any surprises.