10 Questions To Ask Your Loan Officer

1. What's the loan's Interest Rate and Annual Percentage Rate?
   
   Find out what the interest rate will be on the loan as well as the annual percentage rate (APR). The APR is a combination of the interest rate, points and other charges divided by the loan's term to give an annualized rate. It is the best way to properly compare loan costs. Some Mortgage Brokers will give you a lower interest rate, but load the loan with a lot of fees that could cost you significantly more over the term of the loan.
   
   
2. How Many Points Will Be Charged?
   
   A point is one percent of the loan amount. Points charged are additional to the interest rate that is charged on the loan. A loan with a low interest rate and high points may cost you thousands more than one with a higher interest rate but low points. This is important because the number of points charged varies from lender to lender.
   
   
3. What will be the Total Closing Cost Fees Charged?
   
   Lenders charge fees for the services incurred to process and close your mortgage. By law, closing costs must be disclosed within 3 days of the loan application on a “Good Faith Estimate”; however, there are different approaches to calculating them. Some brokers will initially disclose closing cost figures which are very appealing, only to provide much higher costs as your closing date approaches. Your Mortgage Broker should provide a Good Faith Estimate that is equal to or higher than the expected final cost.
   
   
4. Is There an Additional Charge to Lock-In an Interest Rate and Discount Points?
   
   Many lenders offer a lock-in policy that guarantees you a certain interest rate and points for a specified number of days. The alternative to this is accepting the prevailing rate and points on your closing day. Since rates can change daily, locking your rate before the closing may be a way to save you thousands. Many Mortgage Brokers will charge you a fee to lock your interest rate, while some do not charge a fee. You will want to clarify if your Mortgage Broker will be charging to lock your loan.
   
   
5. How Long Does it Take to Process My Mortgage?
   
   Processing is the means by which your loan is prepared for underwriting, or approval. The time it takes to process a loan varies by the type of loan and even among lenders. Loans can usually be funded within 7 to 10 working days. If time is of the essence, a lender with quick processing, underwriting and funding capabilities can prove to be a very valuable asset.
   
   
6. Are You a VA or FHA endorsement Lender?
   
   VA and FHA endorsement means that a lender has met all the government requirements for FHA/VA and the lender's underwriter has completed mandatory education requirements. An endorsed lender can approve or disapprove a loan just as if the loan had been sent directly to the regional FHA or VA office. Even if you do not want to finance your loan using either of these programs, it is important to know that your lender has taken the time and expense to be trained for these programs.
   
   
7. Can I Finance the Upfront Private Mortgage Insurance (PMI) Premium into the Loan Amount?
   
   If your down payment is less than twenty percent of the sale price, to qualify for the loan, you will be charged PMI, an insurance premium to protect the lender in case you defaults on the loan. Some lenders allow you to include the first year premium into the amount of the loan. Including this premium may be the difference that enables you to get the mortgage by reducing your cash outlay at the closing. Your Mortgage Broker should however, have programs that allow you to put less than twenty percent down and avoid paying the PMI at all.
   
   
8. Is There a Pre-Payment Penalty?
   
   Normally you can prepay a loan without penalty if you notify the lender in writing that you are either selling or refinancing. There are however, exceptions. Make sure you understand how your mortgage is structured to avoid confusion in the future.
   
   
9. What is the Lender's Track Record?
   
   It's important to rate your lenders reputation for speedy processing, knowledgeable loan service and meeting contract deadlines. You want to hire a Mortgage Broker who will treat you the way you want to be treated and has respect for your purchase. Your lender will be dealing with your hard earned money and home purchase, so you want to be confident that you have made the correct decisions. Do not be afraid to ask for and check a Broker’s references.
   
   
10. What Do You Offer to the First Time Buyer? (If applicable)
    
    Purchasing a home is among the most significant financial commitments most people will ever make. First time buyers often have special needs and concerns. If this is you, make sure your Mortgage Broker provides services especially tailored for the first time buyer.
    

bob.bradshaw@lakewoodhome.net

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