Use Caution! Home finance is now a diverse and complicated industry. This means mixed results – good and bad. The good is that you have at least a hundred ways to borrow money for your next home. While, the bad is there are dozens of ways for lending companies to take advantage of you. This includes prepayment penalties and hidden costs. You will want to speak with mortgage lenders and to have questions for the lender prepared.
Ask your lender to explain all of their home loan packages and options available to you. However, after you’ve made your final decision on the loan that will work for you, ask the following questions for the lender. They’re more relevant than you might realize.
Home Finance – Questions for the Lender
If these questions apply to an ARM, adjustable rate mortgage, it’s noted below.
– What’s the interest rate?
– What’s the APR (annual percentage rate; includes fees, points and mortgage insurance)?
– If it’s an ARM, adjustable rate mortgage, what is the initial rate (ARM)?
– What is the highest rate the loan can increase to next year (ARM)?
– Are there annual and lifetime caps on the interest rate and payment (ARM)?
– When, or how often is the rate and payment adjusted (ARM)?
– What index is the rate based on (ARM)?
– This loan adds what margin to the index (ARM – it might be the index plus 3%, for example)?
– Am I required to have credit life insurance? This pays off the loan if you die. If I don’t have it, what will the payment be?
– What fees and costs can be waived?
– Are there any prepayment penalties? If so, how much?
– For how long is the penalty in force?
– Can I make extra principal payments?
– What about an interest rate lock in (guarantees interest rate for a time)? If so, can I have that in writing?
– Is the rate locked in when the loan is approved or at time of application?
– If rates drop, can I get a lower rate locked-in?
– What inspections or surveys are required?
– Is a title search or title insurance required, and what are those fees?
– Can I get an estimate of any prepaid amounts that I’m required to pay at closing?
– Will I be paying points, and what will these cost (for example, discount points to reduce interest rate)?
-Are there any, local, state, stamp, or transfer taxes that I have to pay?
– Will there be a flood determination (to see if the home needs flood insurance)?
– Are there any other costs?
– Is there anything else I should know?
While lenders might prefer fewer questions, but you have a right to ask them before you commit to a loan. Consider this; a 1% higher interest rate on a $150,000 loan can cost you an extra $30,000 over the years? Home finance is as important as what you pay for the home when it comes to saving money on your home.
Contact me, and I can give you contact info of lenders in the area who have worked with my past buyers and sellers.