July 12, 2022 by Leave a comment

No two home-buying experiences are the same, which suggests that you might have to expect the unexpected. One way to prepare is to gather questions to ask a mortgage lender early so that you are equipped with the latest information before you continue down the path of homeownership. 

When it comes to a major life decision like buying a home or refinancing the one you own, information is power, and the more of it you have the better. If you are wondering what to ask a home lender, look no further because we have done the research and compiled a list of questions to use.

1. What Type of Mortgage Loans Should I Know About?  

When it comes to questions to ask a home lender, knowing the types of mortgage products they offer should be at the top of the list. Mortgage loans are not one size fits all and finding the right one is just as important as choosing the best home. 

While conventional mortgages are the most popular, this type only scratches the surface of the market, one of which might be better for your situation. 

Below is a handful of some of the most common types of mortgage loans that your lender is likely to offer: 

  • Conventional loans: These loans are further broken down into several types. Something to know is that they are not backed by government agencies, such as the Federal Housing Administration (FHA) or Veterans Affairs (VA). Homebuyers with strong credit and a big down payment want to consider a conventional loan. 
  • FHA loans: Unlike a conventional loan, an FHA loan is backed by the government. If your credit score is on the lower side and you don’t have a large down payment, this mortgage loan could suit your needs. 
  • Jumbo loans: This is a type of conventional loan that is suited for purchasing a luxury home. With jumbo loans, the purchase price of the property surpasses other conventional loan limits. Be prepared to place a large down payment in the double-digit percentage range. 
  • VA loans: If you are a service member, veteran, or surviving spouse, you could be eligible for a VA loan. This mortgage is partially guaranteed by the U.S. Department of Veterans Affairs (VA), paving the way for lenders to offer more relaxed credit standards, attractive interest rates, and minimal closing costs. The VA also lifts private mortgage insurance (PMI) and down payment requirements, though lenders might still expect the latter.

2. Which Mortgage Loan Is Right for Me? 

Remember to ask which loan is best suited for your needs. Just because the terms look good at first glance doesn’t mean that it is the right loan product for you. Once you have shared more personal details with your lender, they will be better able to assess which loans are best suited for you and will deliver the desired results. 

Ask your mortgage lender to provide you with a few options so that you can compare and contrast the pros and cons of each one. And if one mortgage loan requires insurance and another does not, for example, your lender should be able to explain the differences to you so that you have a grasp on these nuances and can make an informed decision. 

Total Mortgage has loan officers standing by at offices located around the country, one of which is sure to be in your neighborhood. 

Contact one of Total Mortgage’s loan experts today. If you are preapproved for a mortgage, you can be on your way to owning a home in 21 days. 

3. How Much of a Down Payment Do I Need to Make? 

One of the early questions you might want to ask a mortgage lender involves the minimum down payment. After all, this amount has the potential to influence other terms of the loan, such as the interest rate and length of the mortgage. Your mortgage lender is likely to explain that your down payment, which is a percentage of the property’s purchase price, could range anywhere from 3% to 20%. 

The higher your down payment, the lower your monthly installment amount is likely to be. In addition, you will pay less interest over the life of the loan, while the speed at which your home equity increases will be accelerated. 

There are certain benefits reserved for homebuyers whose down payment is at least 20%, which we will get into a little later. However, if you are on the other end of the spectrum and can only afford a lower down payment, there are mortgage products designed for you, too.

4. What Should My Credit Score Be? 

When you are preparing questions to ask a mortgage lender, don’t overlook credit requirements. This is a major component in the lender’s credit decision, in addition to a potential borrower’s income and debt-to-income ratio, the latter of which is a reflection of your liabilities vs. your income.

In general, lenders are looking for a credit score of 620 or better. Having a strong credit history will increase your chances for approval and lead to better mortgage terms, such as more attractive interest rates. A weaker credit profile could still be approved, but the terms are likely to be less appealing.

5. How Much Will the Loan Cost Me? 

Another top question to ask a mortgage lender is how much the loan will cost you. By asking a mortgage lender this question, you can avoid any surprises down the road. In this case, you are looking for an interest rate and annual percentage rate (APR), each of which represents how much you will pay the lender for the loan. While these two terms are similar, they are not exactly the same. 

The interest rate is the rate that the lender charges you for the loan, and it is usually expressed as a percentage of your monthly balance. The APR, meanwhile, is more encompassing. In addition to the interest rate, it represents other expenses such as closing and loan origination fees.  

6. Must I Purchase Mortgage Insurance? 

Another thing to ask a mortgage lender is whether you will need to invest in mortgage insurance. This is a policy that protects the lender if the borrower defaults on the loan. Mortgage lenders might suggest ways in which you can reduce or eliminate the mortgage insurance requirement altogether. 

If you are getting a conventional mortgage, you can skip purchasing mortgage insurance by making a minimum down payment of 20% of the purchase price. Otherwise, you might be able to exit the insurance policy once you’ve acquired at least 20% equity in the property.   

7. What Is the Loan Estimate?

Be sure and ask your mortgage lender about your loan estimate. This is a document comprising relevant details pertaining to your loan, including the duration of the mortgage, interest rate, and closing costs, for example. 

It is an important question to ask so you can see a breakdown of the cost of the mortgage and address any concerns with your lender. You should have this document in your hands within three days of completing the mortgage application.

Explore Affordable Loan Options from Total Mortgage

There is no shortage of questions to ask a mortgage lender when it comes to one of the biggest purchases of a lifetime. Fortunately, our experts at Total Mortgage are equipped to field these questions and more. 
Get started on your home buying journey today with Total Mortgage at your side.

Apply online today and get a quote.


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