WHAT WILL THE TOTAL HOUSE PAYMENT BE?
It’s easy to focus just on what your mortgage payment will be each month, but keep in mind that you’ll also have to pay for property taxes, homeowner’s insurance, private mortgage insurance, etc. These all add up. Know the full amount you’ll need to pay each month to ensure the home will be affordable and not get in the way of your other expenses and savings goals.
HOW MUCH DO I NEED TO PUT DOWN?
Good lenders will be able to provide with a variety of down payment options, depending on how much cash you have to put down. This is also why it is important to shop around for loans. Before picking a bank and a type of mortgage, ask exactly how much you’ll need to pay upfront, including closing costs like appraisal and title fees, property taxes and points, if there are any.
Most lenders do not require a 20% down payment. However, if you do not put down 20%, keep in mind you must purchase private mortgage insurance as well.
WHAT’S MY RATE AND HOW LONG IS IT GOOD FOR?
Rates are at an all time low. Low interest mortgage rate helps reduce your monthly payment, so make sure to shop around for lenders and NEGOTIATE!
You also should ask how long the rate is locked down for and make sure again that the rate is actually locked in once you’re satisfied with the quote you receive. That way it won’t change (unless you get a variable rate), even if rates rise in the meantime.
DO YOU CHARGE ANY LENDER FEES OR POINTS?
Expect to pay several charges on the closing date when you take out a mortgage including title fees, loan processing fees, underwriting fees, loan origination fees, etc. These will all be including in the closing disclosure that banks are required by law to give you at least 3 days before closing. Some of these can be negotiated.
Also ask your lender about prepaid interest, also known as points. Each point is equal to one percent of the home price. So paying two points on a $300,000 home means you will pay $6,000 at closing. Paying points will typically lower your interest rate, which is one reason it may look like you’re getting a great deal. You must take points into consideration when comparing different lenders.
WHY DO MORTGAGE APPLICATIONS GET DECLINED?
The lender offers you a great rate with a down payment you can actually afford and everything seems to be moving along smoothly. The last thing you want is to find out that the bank or mortgage company decided to back away from your loan at the last minute, but IT HAPPENS! They may tell you because of credit, or a new job, or lack of assets. Knowing why mortgages don’t make it to the finish line will help prevent you from getting into that situation yourself.
WHAT TYPE OF MORTGAGE IS BEST FOR ME?
While most lenders will assume you want a 30-year fixed as that is most common, a good lender will take time to go over several different loan options. There is no one-size-fits-all to mortgages. Tell the lender about your plans and have them give you the pros and cons of different options.
HOW LONG WILL THE PROCESS TAKE?
When it comes to home buying, timing is of the essence! You’ll want to ensure that the lender you choose can not only close your loan, but do so by the closing date specified in the purchase agreement. It is HIGHLY RECOMMENDED that you get your pre-approval from the bank BEFORE beginning your home search. Sellers will take your offer more seriously and you are more likely to close on time with a letter of pre-approval. These only take about 5 minutes and are very easy to get. In today’s market, it takes a lender typically at least 30 days to complete the loan process, so make sure to get your letter of pre-approval before signing a contract, and your closing date is set to at least 30 to 45 days from signing!
As with any huge purchase and like we’ve said earlier, you definitely want to shop around. Ask this list of questions to multiple lenders so you can figure out who’s going to give you the best overall value, not just the lowest advertised rate. At the end of the day, you will be very happy that you did your due diligence in shopping for a loan!
If you are searching for lenders or other service providers in the Paducah area, check out our resources tab on our website! As always, if you have any questions or are looking to buy a home, don’t hesitate to reach out to any of our licensed real estate professionals!