Buying a new house is very exciting, but it’s easy to ignore the main problem. Ask the lender before you settle the loan. Before applying for a new mortgage or a mortgage, it is important to conduct research and obtain as much information as possible so that you can make the best financial decisions.
Before making a mortgage, it is best to visit a multi-lender website like Credible to compare mortgage lenders and check the currently available mortgage rates. Check if you are eligible for low interest rates today.
What questions should I ask before closing the house?
Explore the 10 most important questions to ask a mortgage lender before applying for a home loan.
- What type of mortgage do you provide? What mortgages do I qualify for?
- What is my interest rate and annual interest rate?
- How long does it take to apply for and close my mortgage?
- What is the loan discount point?
- What do I have to pay?
- Will my interest rate change during the loan term?
- Can I lock in interest rates on my mortgage?
- Can you estimate my monthly payment?
- Will I pay for private mortgage insurance (PMI?)?
- Will I pay any advance payment penalty for this loan?
1. What type of mortgage do you provide, and what mortgage do I qualify for?
Once your lender has reviewed your credit and determined the budget and advance payment, you will have a better understanding of the type of mortgage that is best for you. You have several options:
- Conventional mortgage: These are not covered by federal government insurance.
- Fixed rate mortgage: The interest rate remains the same for the duration of your loan.
- Floating rate mortgage: These fluctuating interest rates rise or fall according to market conditions.
- Government-guaranteed mortgage: These are FHA, USDA and VA loans
- Oversized mortgage: Loans with substandard loan limits, which means they exceed the limits set by Freddie Mac and Fannie Mae.
If you want to learn more about the different types of mortgages available now, please visit Credible.
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2. What is my interest rate and actual annual interest rate?
The interest rate or annual interest rate (APR) you qualify for is usually based on your credit score and credit history. Some lenders will also look at your work history, income, debt-to-income ratio and other factors to determine what qualifications you qualify for. Generally, if your credit score is higher, you will get a better interest rate.
Efforts to obtain the lowest mortgage interest rates are crucial. With Credible, you can find your rate and estimated monthly payment in minutes. In addition, it is free!
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3. How long will it take to apply for and close my mortgage?
According to the “Real Estate Agent” magazine, the average time from application to closure may take 48 to 51 days. Four days have passed since the “know what you owe” mortgage disclosure rule took effect last October.
In a report, Ellie Mae broke down the average settlement time by loan type:
- 49 days: regular loan
- 51 days: purchase loan
- 48 days: refinancing loan
- 51 days: Federal Housing Administration (FHA) loan
- 53 days: Department of Veterans Affairs (VA) loan
Go to Credible to compare the interest rates and loan plans of multiple lenders who need to fill out fewer forms.
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4. What is the loan discount point?
Using loan discounts or mortgage points, you can pay more upfront payments in exchange for lower loan interest rates. A fee of 1% of the mortgage amount equals a discount point, which usually results in a 0.25% reduction in your interest rate.
If you plan to keep the break-even point of your mortgage loan above the break-even point, or when your monthly savings are equal to the upfront (points) expenses, paying discount points or “pay off interest rates” is a good choice.
The mortgage rate has dropped to a new low for the thirteenth time this year.
Current exchange rate as of December 24:
- 30-year fixed rate mortgage -2.66%
- 15-year fixed-rate mortgage -2.19%
- 5/1 year adjustable interest rate mortgage (ARM) -2.79%
Credible can guide you through the home buying process-use its free tools to browse different types of mortgages and see how much housing you can afford. You can get pre-approval for your home phone in three minutes.
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6. Will my interest rate change during the loan term?
If you have a variable rate mortgage, your interest rate may change during the term of the loan. Even if you have a fixed-rate mortgage, if you pay insurance premiums through an escrow account, or if insurance premiums rise or fall, your payments may rise or fall.
Similarly, if your property tax changes, the custodial portion of the monthly payment may also change. Or, if you pay for mortgage insurance, your payment will change once the insurance can be cancelled.
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7. Can I “lock in interest rates” on mortgages?
The “interest rate lock” (also known as interest rate protection) of a mortgage allows you to “lock in” the interest rate for a specific period of time (usually 15 to 60 days). This means that unless you repay the mortgage, the interest rate will not increase. No matter what happens in the market, even if the interest rate rises by 4%, your interest rate will not change and will be cashed by your lender.
If you want to get a lower interest rate today, please visit Credible to see what the current mortgage lender is offering and what interest rate you qualify for in your current financial situation.
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8. Can you estimate my monthly payment?
Your mortgage lender may be able to estimate your monthly repayment amount, but they usually have to wait until they have calculated the number and are eligible for the loan. However, you can also use an online mortgage calculator to determine potential monthly repayments. The mortgage calculator can provide you with a complete cost breakdown, including principal and interest, property taxes, insurance and mortgage insurance (if your down payment is less than 20%).
9. Will I pay for Private Mortgage Insurance (PMI)?
Whether you pay for Private Mortgage Insurance (PMI) varies from one lender to the next. PMI is used to offset the risk of lenders. If you put down less than 20% of the funds when buying a house, you will usually be charged a fee.
PMI is usually paid monthly as part of the monthly mortgage payment. But it can also be paid as a one-time prepaid premium at the end of the transaction. It is difficult to determine how much PMI will be spent, but you can estimate 0.5% to 1% of the annual loan amount. Moreover, PMI will not last forever. When your loan balance is 78% of the original cost of the house, the lender must lower the PMI.
Not sure you want to pay PMI? Visit Credible to get in touch with experienced loan officers and answer their mortgage questions.
10. Will I pay any prepayment penalty for this loan?
If you pay off the loan before the end of the semester, some lenders will charge an advance payment penalty. If fines apply and when they apply, your loan agreement will most likely clarify. If your lender charges an advance payment penalty, it is usually only within the first three to five years of the loan.
End the new mortgage or have questions about the current mortgage refinancing? Visit Credible to get a personalized price and approval letter without affecting your credit score.