10 Questions You Must Ask When Applying for a Mortgage Loan

Mortgage and Lending with Nicholas Napoletano

When you sit down with a lender, please be sure to get answers to these 10 questions before you go any further in the loan process.

1. What is the interest rate on this mortgage?
Be sure to ask for the annual percentage rate (APR) of the loan's interest.  The APR is usually higher than the originally quoted rate because of the additional fees involved in procuring a loan. You must beware of APR found in advertisements. Often these are used in bait and switch schemes to get customers in the door. Always ask for an itemized list of rates, points and fees.

2.  What discount and origination points will I be charged?
Often lenders may charge prepaid mortgage interest points. Find out the kind of points they will be and their effect on your loan.

3.  Will you give me a good faith estimate of my closing costs up front?
There are fees that are a part of every loan.  These fees pay for the services provided by the lender and the other companies involved in the loan process. Have the lender give you a good faith estimate within a week of receiving your loan application. Experts advise to be wary of any lender that refuses to supply a good faith estimate.

4.  What are the fees, if any, involved in locking in an interest rate?
Interest rates are constantly fluctuating and it is possible that it could change between the time you apply for a loan and the time you close. Often you can "lock in a rate" that will keep your interest rate the same from the day you apply. Please make sure that you find out if there are any fees involved with this.

5. What is the minimum down payment of this loan?
A typical down payment is between 5 and 20 percent of the loan amount.  The more money you can put down, the better your chances are of being able to lower your rate and improve your loan terms. Often, if you are unable to make a down payment of 20% of the loan amount, you will be required to pay private mortgage insurance (PMI).

6. Is there a prepayment penalty on this loan?
Prepayment penalties may be added to lower the loan's interest rate. There are many types of prepayment penalties that can be added to a loan. Make sure that if your loan has a prepayment penalty, you are aware of the terms and conditions.

7. What documents will I need to have?
This will depend on the type of loan you choose.  A "Full-Doc" loan will require full documentation of income, assets, debt payments, etc...  A "No-Doc" loan, on the other hand, does not require any documentation. "No-Doc" loans are only open to those with excellent credit and often require a larger down payment.  They can also carry higher interest rates.

8. What qualifying guidelines are included with this loan?
These requirements relate to your income, employment, assets, liabilities and credit history. First-time home buyer programs, VA loans and other government-sponsored mortgage programs typically offer easier qualifying guidelines than conventional loans.

9. How long does it take to process a loan?
It can take as little as two weeks, to as long as 60 days or more. Be sure to have the lender give you the most accurate timetable possible so you can determine how far out you need to lock your interest rate.

10. What might delay approval of my loan?
If you provide complete and accurate information to the lender, the process usually runs smoothly. Be sure to tell your lender immediately of any changes to your income or any new debt or marital status while your loan is processing. There could be delays if the underwriter discovers any undisclosed credit problems so be sure to be as accurate as you


Why do I offer this valuble information?  I am offering this information because I want to be your mortgage advisor.  I offer more than simply a loan:  I'll personally advise you on how to use and apply the principles contained in this blog. If you have any questions please do not hesitate to call me.  I want to earn your business.

Take Care

Nicholas Napoletano

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