Sierra Vista Homes

Whenever you decide to get a mortgage it is important that you know just what you are in store for. After all, you do not want any surprises to come your way. For this reason, there are some questions that you need to ask your lender before signing on the dotted line.

Is there a prepayment penalty?

You should never accept a mortgage that has a prepayment penalty unless you have very bad credit. This is because such penalties only help to increase your lender's income if you should happen to either refinance or sell your home. This could actually cost you as much as 6 months worth of interest, which is 85% of the original loan's balance.

Will your lender guarantee the interest rate?

You will find that interest rates fluctuate from week to week and even from day to day. Therefore, you should ask your lender to lock in the rate that he quotes you along with the points that are requited. Make sure that when he does this he gives you enough time to close on the mortgage so that he does not charge you a fee for this guarantee.

What documentation does your lender require?

This is important because if your lender requires that you have an appraisal or survey done you will want to make sure that you have this done before closing.

Other Important Questions

The 3 aforementioned questions are those that are the most important to keep in mind whenever you are interviewing a lender. However, there are also some other questions that you will want to ask. These include:

1. What are the lender's requirements for middle credit scores and income?
2. What does their standard loan cost? This should include such things as points, processing, underwriting, documentation preparation, filing and credit report fees. It is also a good idea to ask if these fees can be added to the amount of your loan?
3. Is mortgage insurance required? If this is required, you will want to know what the minimum percentage that you will need to put down is so that you can avoid having to purchase the insurance.
4. How much can you finance?
5. Are sellers able to help with the loan costs? If so, then to what extent?
6. What is the grace period if you happen to miss a monthly payment? Also, how late can a monthly payment be before it is considered "missed?"

Conclusion

Now that you know what to ask, you will know exactly what you are in store for. This will help you to be better prepared to sign the contract and deal with its terms.