Before visiting a prospective mortgage lender, it would be a good idea to write down pertinent questions so that you will be able to decide whether or not this lender is appropriate for you. The following are basic queries that are suggested, in one form or another, by most lending institutions.
1. What will my interest rate be?
Although most lenders will charge almost identical rates, they can vary by a wide margin, especially in instances where the borrower does not have a perfect credit history. This question should be at the forefront of everyone’s list.
2. Can I lock in this interest rate?
Most institutions allow a borrower to lock in the interest rate for a fee.
3. If my loan is approved, will the interest rate ever change during the life of the loan?
In the past many people thought they were getting a good deal when they obtained a sub-prime rate, only to find out later there was an explosive increase when interest rates suddenly rose.
4. How much will the closing costs be?
The total amount for closing costs varies by institution, but it is a good idea to know this amount in order to plan the rest of your budget. Lenders provide this amount to you within three days of application.
5. Will I have to pay for discount or origination points?
A lender will be required to provide you with the answers to this question. Often it is to your advantage to pay these fees as they can result in a lower interest rate being charged.
6. Do I qualify for any special programs?
A good example would be for Veterans Administration loans or loans for first time home buyers, etc.
7. How much will my monthly payment be for principal, plus interest plus any additional costs for taxes and insurance?
This question is undoubtedly the most important one on the list. A surprising number of people in the past have lost their homes because they could not afford the total monthly payment of all costs. Make certain you know this figure and are comfortable with it.
Since the aforementioned suggested questions are very basic, it would be ideal if you added others that are pertinent to you. Much online help is available for home buyers. A good starting point would be to visit: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/buying/buyhm