6 Questions to Ask Your Lender to Secure an Affordable Home Loan
With lending standards and credit criteria continuing to shift on a seemingly daily basis, it's no wonder most consumers are confused and hesitant to move forward on buying a home. But when armed with the right series of questions, home buyers can work with their lender to help secure an affordable, sustainable home loan. Here are some key questions to ask your lender or real estate professional when embarking on the mortgage process:
1. Where does my credit score need to be?An experienced lender can tell you point blank what kind of interest rate you can secure based on your credit score.
2. How can I improve my credit score?Your lender should be able to look at your credit report and tell you exactly what to clear up in order to raise your credit score.
3. What will my total monthly payment be?Make sure your lender takes all variables into consideration to let you know exactly what your monthly payment will be, down to the penny.
4. What are the qualifying guidelines for the loan?With the array of government programs and loan products available, qualifying guidelines can vary dependent on the type of loan product. Ask your lender what type of loan is best suited to your qualifications.
5. Does the loan have any points or origination fees? Sometimes, you may have to pay points, prepaid mortgage interest, at closing in order to get a lower interest rate. Ask about this upfront to help you decide if this is the best loan for you.
6. What is the annual percentage rate (APR)?The APR is important for true loan cost comparisons and is typically provided to you at the time of application (or within 3 days) on a Truth in Lending disclosure (TIL). The APR is generally higher than the initial rate because it includes all of the lenders fees.
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