Top Questions to Ask a Mortgage Lender

In all of the excitement that comes with buying a new home, it’s easy to lose track of important financial details. Before applying for a loan, talk to a few different lenders and ask about their approval processes. Find out what types of loans they can offer and if there are any special programs you may qualify for. To help you get all of the information you need, here are the top questions to ask a mortgage lender.

Ranch-style home
Las Vegas, NV

 

Questions to Ask Before Applying for a Loan

How much will I be approved for?

Be prepared to provide a brief overview of your finances in order for lenders to determine what you can afford. Even if you’re approved for a large mortgage loan, however, it’s important to only borrow what you need. You may have other financial goals including building equity or paying off your home faster.

What are my loan options?

A reputable lender should thoroughly review your financial situation before recommending specific loan options. Once you’ve provided the appropriate information regarding employment, income, assets, credit, and any other details, your lender should then be able to educate you on which mortgage programs might best suit your needs.

What can I expect in terms of communication?

It’s important to choose a lender who works well with your style of communication. Setting expectations upfront about the type of communication—emails, texts, or phone calls—and how frequently they’ll touch base while working on your application can make the process less stressful for you.

How can I get the best interest rates?

If you need to take action to improve your credit, now is the time to do so. Ask your lender about their approval criteria and how you would qualify for the best rates. If you need to pay down outstanding debt or save a larger down payment, you can work on that while you are house hunting.

Do you know of any home-buying programs I would qualify for?

The federal government and individual states offer home-buying programs for first-time buyers, military personnel, or other qualifying borrowers. Banks or lenders may also offer in-house programs that you may qualify for. If you’re interested, ask your lender if they’re aware of home-buying assistance programs that would fit your profile.

When can I lock my interest rate?

Make sure you know what your interest rate options are up front. Some lenders offer long-term rate protection, which is great if you’re in the process of building a new home. By locking in your rate, you’ll gain peace of mind about your mortgage payment and protect yourself from fluctuations in the market.

Modern farmhouse exterior in sylvan location
Kirkland, WA

 

Questions to Ask During the Application Process

Does my loan charge points and how will they help lower my payment?

One point is equal to one percentage of the value of your mortgage loan. For example, one point on a $100,000 loan would equal $1,000. By paying points up front, you’re effectively prepaying some of the interest associated with the loan and lowering the rate you’ll pay over the rest of the term, which lowers your monthly payment in turn.

What documents will I need to provide?

The type and amount of information requested may depend on your credit, employment, and financial situation. Mortgage guidelines have changed in recent years, so be prepared to gather a lot of documents, including tax returns, photo IDs, bank statements, and proof of income. If you can ask this question early on in the process, you won’t be scrambling to provide information and delaying your approval on the back end.

How long will the process take?

The time it takes to approve your loan can vary due to your personal financial position. Your lender may also request additional information as they move through the underwriting process. If you can get a general idea of how much time the lender needs to approve your loan, you can work on scheduling your settlement and coordinating your move into the new home.

Will I need to pay mortgage insurance?

Buyers with a down payment of less than 20 percent for conventional loans will need to pay for private mortgage insurance, as these loans may be perceived as higher risk by the lender. All borrowers with an FHA loan must purchase mortgage insurance. If you think you might need to pay for mortgage insurance, ask your lender about this added cost.

What are my estimated costs for this loan?

Within three business days of receiving a mortgage application, all lenders must provide the borrower with a standardized form known as a Loan Estimate. This form provides a breakdown of the proposed loan, including information on interest versus principal, mortgage interest, and estimated closing costs. If you have any questions about these costs, review them with your lender.

Couple researching questions to ask a mortgage lender

 

Questions to Ask After Loan Approval

What do I need in order to close?

Once your loan is approved, you’ll likely move on to preparing for settlement. Ask your lender for a list of documents you’ll need to provide at closing. If you need to make a payment, find out if the check must be certified and who it should be made out to. If you need to move funds from a savings account to a checking account to cover your closing costs, make sure you leave enough time to carry out the transfer and visit the bank for the certified check before settlement.

Can you give me a final breakdown of my closing costs?

Closing costs for a loan can be significant, especially if you’re paying points on the loan. You should receive a Closing Disclosure document from your lender with the final cost estimate around three business days before closing. Review this document carefully and question any discrepancies that you find.

When will I receive my final loan documents?

Once you’re finished and you’ve received the keys to your new home, don’t forget to ask the closing agent or your lender for a copy of all executed documents for your records.

Because you may have more questions to ask a mortgage lender, look for reputable lenders that you’re comfortable with and who have expertise in your type of home purchase. They should provide personalized attention and help make the process easier. A home purchase is a significant investment and different types of mortgages can affect your payment—it’s important to make sure you choose a lender that works best for you. To learn more about TBI Mortgage Company, contact a loan officer to answer your questions today.

Couple meeting with their mortgage lender
Jennifer A. DiGiovanni

written by

Jennifer DiGiovanni is a freelance writer, an author, and a small business owner. She previously worked in the financial services industry and has attained an MBA from Villanova University. Jennifer enjoys writing about real estate, business, home improvement and personal finance. She resides in the suburbs of Philadelphia, PA.

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