9 questions to ask mortgage lenders
Knowing what to ask could save you money in the long run
Read, 3 minutes
How much can I borrow to buy a home?
When determining how much you can borrow, lenders will consider your income level compared with debt, your employment status and your credit history. Talk to a lender about getting prequalified for a mortgage before you start shopping for your new home.1 This can make the whole experience go more smoothly.
How much money do I need to put down?
To get the best rate and terms for your loan, try to put down at least 20 percent of the purchase price.
Although a lower down payment won’t necessarily disqualify you, there is a chance that a monthly payment will be added if your down payment is less than 20 percent. Your down payment will affect other variables as well, such as your interest rate, terms and monthly payments. Ask your lender for more information about the minimum down payment required for your loan and if you might be eligible for any down payment or cost-saving assistance programs, and decide what’s right for you.
Are assistance programs available?
Many housing agencies, nonprofit organizations, and even employers offer down payment assistance programs that could help you with the up-front costs of buying a home. These programs may have income limits, purchase price limits and first-time homebuyer requirements however when combined with a low-down-payment mortgage, these programs can make buying a home more affordable. Many of these programs are listed on the Down Payment Center which allows you to search for approved programs in your area.
Down payment assistance programs are offered by government agencies and nonprofit organizations. They can be combined with most mortgage loan products to help make buying a home more affordable. Most programs have specific eligibility requirements, including income limits, purchase price limits, first-time homebuyer requirements and/or location restrictions.
What’s the interest rate?
Ask your lender for a direct interest rate quote, as well as the corresponding annual percentage rate (APR) for the loan. Since the APR accounts for fees and other loan-related charges, it gives you an apples-to-apples comparison among lenders. Don’t be afraid to shop around until you find one you’re comfortable with. Your lender may accept a fee at closing in exchange for a reduced interest rate.
What’s the difference between a fixed-rate and an adjustable-rate mortgage?
Set interest rate for the life of the loan
Your monthly payments of principal and interest remain the same for the life of the loan
Adjustable-rate mortgages (ARMs)
Interest rate may change periodically during the loan term
Your monthly payment may increase or decrease based on interest rate changes
When can I lock in the interest rate?
As interest rates can fluctuate, locking in a rate can really pay off. Ask your lender when you can lock a particular rate and for how long. Keep in mind, lenders will usually offer lower interest rates for shorter-term locks and higher interest rates for longer-term locks.
What are my estimated closing costs?
Remember to factor in the various fees associated with buying a home—particularly closing costs. include loan origination fees, appraisal fees and attorney fees (if any), to name a few. Your lender will provide you with a Loan Estimate showing the approximate costs of your loan so you can budget accordingly.
Are there any other costs or fees I should know about?
As you approach the closing date for your purchase your lender will calculate the total amount of money you will need to complete your transaction and provide that to you in the form of a Closing Disclosure. This will include the closing costs shown on your Loan Estimate plus any prepaid items like mortgage interest, property taxes, and homeowner’s insurance. It’s a good idea to compare the Closing Disclosure to the Loan Estimate you received.
Can you estimate when the closing will be?
A lot of factors help determine when your exact closing date will be—many of which are completely out of your control. While delays can happen, the best way to avoid them is to stay in touch with your lender and provide the most up-to-date documentation as quickly as you can. Ask your lender for an estimate of when you might expect to close. That way you’ll at least have a rough idea of the timetable you’re working with.
- Prequalification is neither preapproval nor a commitment to lend; you must submit additional information for review and approval.