Rule of thumb when applying for a new home mortgage: never make a decision based solely according to the mortgage interest rate (better known as the "note" rate). Instead, take a close look at the jargon surrounding your mortgage program. Rule of thumb number two: don't be afraid to get a few different quotes (just don't get too carried away, 3 quotes is quite sufficient. Any more than three and you will drive yourself up the wall, not to mention, you risk the possibility of damaging your credit scores by having your credit pulled excessively). While shopping around, be prepared to ask your mortgage broker a few key questions.
The answers that you receive will assist you in making a decision as to which loan is best for you. So, with that being said, here are the key questions you should ALWAYS ask: 1. How soon can I expect my mortgage loan application to take? Typically, a loan application for a home mortgage takes about 45-60 days to come through. Of course, there have been times when they've taken just 30 days too! But really the time taken depends on how soon the lender can get the property appraised, a credit report and employment details and bank accounts verified. This will also depend on whether you are purchasing a home, refinancing, or taking out a second mortgage. 2.
Which documents will I have to furnish? A certificate proving your income and assets will be necessary to get a home mortgage loan. However, lenders ask for different documents, so it depends on whom you meet. 3. What would qualify me for a home mortgage loan? Your lender will look at your credit history, income, employment status, assets and debts before granting you a home mortgage loan.
If you're a first time home buyer, you stand a better chance of being granted a loan. 4. How much would I have to pay as a minimum down payment (for purchases only)? First, finalize the down payment amount on your home mortgage loan.
Based on this your lender can offer you a range of interest rates, loan terms and perhaps even refuse to consider private mortgage insurance. While some loans demand a 20 percent down payment; others are lower than that. 5. How much mortgage interest would I have to pay annually? To compare well against different lenders' rates on your home mortgage loan, ask them for their annual percentage rate or APR of the mortgage interest. 6.
How much would I have to pay by way of origination fees on the loan? Origination fees are usually paid as prepaid mortgage interest on your entire home mortgage loan. Your lender might ask you to pay this in points at closing time just so that you get a lower interest rate on your home mortgage loan. 7. Can the interest rate also be locked in? The interest rate of your home mortgage loan is variable, so it could rise or fall before you closing time. So, it would be wiser to lock in the rates for a specified time period rather than have a floating rate till closing. Ask your lender for any fee for locking in a rate and if you could lock in points.
8. What is meant by the "good faith estimate" of closing costs? Mortgages, including home mortgage loans, are accompanied by a whole litany of fees. So, ask your lender to show you the whole list of estimated closing costs before you actually apply for the loan. And bear in mind that certain fees must be paid upfront, for instance the credit report, property appraisal and loan application fee. 9.
Will I also be asked to pay a prepayment penalty on the loan? This is a matter for mortgage home loan shoppers to consider. You would need to know the duration of the penalty period and how the fee will be calculated. While some penalties stand at one percent of the loan amount, others aren't that simply calculated. 10. Can I expect any setbacks in my home mortgage loan being approved? Everything on your home mortgage loan can go like clockwork if you provide the lender with complete and accurate information about your financial status. However, there could be a delay if the lender finds credit problems in your financial statement.
To avoid such an eventuality, notify your lender on your personal or financial status if there is a sudden change after you have sent in your application. For instance, if you have changed jobs suddenly, got an increase or decrease in your salary, have had a windfall, or if you have a change in your marital status, inform your lender.
Tabitha Naylor is an experienced mortgage broker/consultant with Apex Financial Mortgage. For more information, or additional resources on home loans, visit Apex Financial Mortgage
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