1. What
are the loan's Interest rate and the Annual percentage rate?
The annual percentage rate and the loan interest rate must be compared. The
Annual percentage rate, better known has the "APR", is a combination of the
interest rate, points and other charges (service charges, bank charges, etc.)
divided by the loan's term to give an annualized interest rate. It's one of the
best ways to compare loans because all the costs are summed up and compared.
2. How many points will be charged to my loan?
A point is simply a different way of saying "one percent of the loan
amount". Points charged are usually additional to the normal interest rate
charged on the loan. A mortgage loan with a low interest rate and high points
will possibly cost you much more than a loan with a higher loan interest rate,
but with low points. This is very important because the number of points charged
to the borrower fluctuates from lender to lender.
3. What will be the final total closing cost fees?
Lending institutions and lenders charge fees for their services.
Closing your mortgage is usually a charged service. By law (in the United
States), closing costs must be disclosed within 3 working days of the loan
application. Each lender has is own way of calculating the closing costs. Some
will first give you some closing costs that seem very affordable, but they will
give you some much higher numbers as the closing date approaches. Therefore,
make sure you ask what the real closing costs will be and ask the lender to give
them to you in writing.
4. Are there additional charges to "lock-in" the rate
and the points?
Some lenders offer to "lock-in" the interest rate and discount points for a
specific amount of days. If they do make you such an offer, ask that lender or
that lending institution if there are any extra charge for that guaranteed
interest rate an discount points. One way to avoid such extra charges is to
accept the prevailing rate and points on your closing day. It's a guess game.
Rates change daily, an extra charge that guarantees you a "lock-in" fee could
save you thousands of dollars; on the other hand, it might save you nothing.
5. How fast can the mortgage be processed?
A lender usually take between seven to ten days to prepare the loan for
underwriting and approval. The real amount of time that is needed varies a lot.
It mainly depends on the lender's system to process the data and to provide the
funding. If time is an important factor, use a large lending institution.
6. Are you VA and FHA endorsed?
Government requirements for VA automatic and FHA direct endorsement
have to be obtained in order to show that the lender has completed all the
mandatory education requirements. An automatic or direct endorsement lender is
allowed to approve or disapprove a loan as if the loan had been directly do at
the regional FHA or VA office.
7. Can the Private Mortgage Insurance (PMI) be
financed?
Is some cases, if the down payment is less than 20% of the sale price, in order
to qualify for the loan, you will be charged a premium, the PMI, which protects
the lender in case you or someone else who assumes your loan defaults on it.
Many lenders or lending institutions allow you to include the first years of
your Private Mortgage Insurance into the amount of the loan. Including or not
this premium may be what makes the difference when getting a mortgage by
reducing your cash pay out.
8. Do you have a pre-payment penalty?
Usually, you can prepay a loan without any penalty if you notify the lender or
the lending institution in writing that you are selling or refinancing. Like
everything else, there are some exceptions. Make sure you are not one of them!
Ask about your specific mortgage, and if needed, have it configured for your
specific situation.
9. What is your track record?
Your lender's reputation is an important factor. Does he do speedy processing,
is he knowledgeable of all the loan services, does he meet the contract
deadlines? You just don't want to hire a mortgage broker that has a bad
reputation with the lenders. The broker you want to hire has to be one that
treats it's customers with respect and professionalism.
10. Do you offer any first time buyer services?
You've read it all over, the purchase of a house is one of the biggest money
commitment most people will do. A good number of first time buyers have special
needs and, quite understandably, some concerns. If such is your case, ask your
mortgage broker if he provides some sort of services especially adapted for the
first time buyer.
DISCLAIMER: The information contained herein is deemed accurate and correct, but
cannot be warranted against changes subsequent to the time of it's publication.
This material is not intended or offered as legal, investment, real estate,
mortgage, insurance, tax, or other advice. The author and the publisher assume
no liability for the use (or misuse) of the material contained in this
publication or related materials. This material is not warranted for any
particular or general purpose whatsoever. Viewers of this material assume any
and all risks for any use of this material.
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