We don't ask enough of them. It's honestly the best thing you can do when obtaining a mortgage. Refinance or purchase the number one thing you want to do is ask questions when working with an experienced mortgage professional.
What questions should you ask?
Great question! Knowing what to ask is an important part of this so I'll share some questions that I think every homebuyer and homeowner should ask before, during and after they apply for a new mortgage.
The Questions You Should Ask:
I'll break this down into three parts; before you apply for a mortgage, during the loan application process and finally after your loan closes. Asking these questions will save you time and hopefully money.
Before You Apply:
I know; you're eager to get going and want to get pre-approved asap. But before you do you really need to ask yourself a few questions to avoid taking on a payment you can't handle. Truth-be-told; just because a mortgage company approves you for a certain monthly payment doesn't mean you can 100% afford it.
So before you apply ask yourself these questions:
- Can you afford your rent payment comfortably?
- If you can or can't what would be the comfortable amount you can afford each month even if you were unemployed for three to six months?
- Do you have money for a down payment or is someone giving you a gift?
- Do you have money for closing costs?
- Where are your income docs and are they easily accessible?
If you can afford $1500 in rent then your total mortgage payment with property taxes, property insurance, HOA (if applicable) and PMI or MI (if applicable) should not be more than $1500.
During The Application Process:
Ok so you're ready to get some quotes from an experienced and knowledgeable mortgage professional. Here are the questions you should ask:
- What is your online ratings with the Better Business Bureau, Zillow, Yelp or any other well known and well respected source?
- How long have you been a Loan Officer and where have you worked the last five to ten years?
- What is the interest rate and the TOTAL FEES, and I mean for everything, of the loan? Make sure you say total, and then "everything"
- When will you lock the rate?
- Can you close in "X" number of days?
- Is there anything on the Loan Estimate that is not 100% accurate? You ask this question after you receive the LE.
- During the process always check in with the Loan Officer (at least once a week) and ask; where are we at?
There are thousands and thousands of Loan Officers out there. Don't waste your time with someone that has bad reviews or doesn't have at least five years of experience in the mortgage industry.
Asking what are the total fees is perhaps the most important question you can ask a Loan Officer - it's a must. Too many people are focused on if there are points or no points and don't take the time to find out all the other possible fees.
After The Loan Closes:
You're all done, congratulations! Only a few more questions to ask:
- When is my first mortgage payment?
- When will I receive my first mortgage statement?
- Will I be receiving any sort of refund from escrow?
I know it's a lot of work but you really should do the best you can to inform yourself about mortgages before you call around for quotes. The time you spend doing some basic research could end up saving you hundreds if not thousands of dollars. Learn the key terms, the different types of loan programs and find a great mortgage company to work with.