Talking with a mortgage lender might seem overwhelming, but it doesn’t have to be!
You should feel confident when you decide to take the next step and reach out to a loan specialist. But that doesn’t mean that you can’t ask the lender questions you have about homebuying.
Especially if you’re new to the process, your lender will be able to guide you through and provide information.
There are common questions that every buyer should be asking. We’ve put together 5 important questions to ask your mortgage lender in preparation of buying your home.
1. What does the purchasing process look like?
It helps to be familiar with the start-to-finish process of purchasing a home so you know what to expect. The main steps to homebuying include:
- Conducting a credit check
- Pre-approval for a mortgage
- Finding a real estate agent
- Finding a mortgage lender
- Looking at homes
- Getting a home appraisal and inspection
Purchasing a home can also be a lengthy process, which is why it’s beneficial to work with an experienced loan officer who can guide you and walk you through these steps.
Once you discuss the purchasing process, you can determine if you’re really ready. Before you start looking for homes, there are many important questions you should ask yourself. Consider your budget, potential location, and type of home you want.
Having answers ready to these questions can help point you in the right direction, and your mortgage specialist can help you get there. Loan officers can help to assess your finances and let you know if you’re in a good position for a mortgage.
2. How Much Should I Save for a Down Payment?
There’s much confusion around how much you should save for a down payment on a home. It’s often thought that 20% is required but that largely depends on what kind of loan you have and the terms of the loan.
Your down payment is essentially the amount of money you pay now for your home, while your mortgage lender provides the financing for the remaining cost of your new home.
Ask your mortgage lender what to expect for a down payment with whichever loan you apply for. For example FHA and VA loans offer more flexible down payment requirements.
3. What Types of Loans are the Best Fit for Me?
There are a few factors to keep in mind when shopping for your perfect loan. Be sure to ask your mortgage lender which of these loans would be the best for you.
River City Mortgage specializes in the following loan programs to best suit your needs:
- Conventional loans
- FHA loans
- VA loans
Conventional purchase loans are the most common and typically offer the most flexibility because they’re not backed by government agencies. They require a minimum 3% down payment and offer fewer fees and penalties.
You have the option between a 30-year, 20-year, or 15-year term length with a fixed interest rate and you choose how you pay your mortgage insurance. If you have good credit, you might be eligible for a better interest rate.
FHA loans are backed by the Federal Housing Administration, making these loans helpful for first-time buyers since they work with lower credit scores and lower down payments.
VA loans are service-based and are offered based on a few factors, such as your service status, years of service and your service record.
Loan officers, such as those at River City Mortgage, can break down any other factors that might also determine eligibility. VA loans offer lower-than-average interest rates, no monthly mortgage insurance premiums, and fixed interest rates.
4. What are fixed-rate mortgages vs adjustable-rate mortgages?
There are two types of interest rates with mortgages, fixed-rate and adjustable.
A fixed-rate mortgage will charge a set rate of interest and will not change over the life of your loan. This rate won’t change no matter what happens and is typically offered for 30-year, 20-year or 15-year length loans.
An adjustable-rate mortgage can be set below the market rate and can rise over time. For the first 3-5 years, your rate might be lower with an adjustable rate mortgage, meaning you can put more money into something else, like a down-payment.
Your lender can explain the difference between the two types of mortgages and some circumstances to consider when deciding what’s best for you.
What’s the difference between an interest rate and APR?
Your interest rate is expressed as a percentage and reflects what you’ll pay each year to borrow the money for your home.
The APR (annual percentage rate) is based on your interest rate, points, fees and any other charges you pay for your loan – meaning your APR will typically be higher than your interest rate.
It’s important to ask your mortgage lender what your interest and APR rate will be to better prepare yourself for what you’ll be paying after you close on your home.
5. Can you walk me through the loan estimate?
A loan estimate is provided to you by your lender and will break down information regarding the loan you requested.
The loan estimate should include what kind of loan you are interested in, what the interest rate would be, your estimated monthly payments, and closing costs.
Loan estimates are extremely helpful to have and refer to, so you should ask your mortgage lender when to expect a loan estimate, as well as any other questions that will help you understand the estimate.
River City Mortgage is here to help you buy a home
The loan officers at River City Mortgage want you to feel comfortable with whichever loan you decide. We hope you feel more prepared with these questions to ask your mortgage lender and understand how they can help you.
They will review your loan estimate with you and answer any questions you may have, so you can stop stressing and start celebrating your journey to your new home. Contact a River City Mortgage loan officer to get started today.