Vital Questions for Your Home Lender
When you're about to purchase a property, the biggest continuing cost is your mortgage. Taking out a secured loan involves a huge amount of money and the loan also pledges your home as collateral to the loan.
If you're about to take out a home mortgage loan, you should ask some vital questions to the mortgage lender so that you're not in the dark while taking out a home mortgage loan and you're not deceived by the lender.
Here are some of the most vital questions that you should ask your mortgage lender before taking the plunge.
What are kinds of mortgages that you offer?
Before taking a plunge, you should be aware that there are different kinds of mortgage loans in the market and you need to know what kind the lender is going to offer. There are FRM (Fixed Rate Mortgage) and ARM (Adjustable Rate Mortgage) and these two are the most common kinds of mortgage loans available in the market. The type of mortgage loan that you take out should be in accordance with your present financial condition, so this is a vital question.
Which kind of mortgage that will fit my financial condition?
When you surrender your personal financial information to your mortgage lender, he should be able to give you the kind of mortgage advice that best fits your present financial condition. The lender should have your best interests in mind and hence you should always try to inform him about your employment, credit, debt, down payment, income and assets so that he may know the best option for you.
What will be the total cost of getting a mortgage loan?
If you had the idea that taking out a mortgage loan only means paying the interest rates and the closing costs, you are grossly mistaken. There are a huge number of other costs associated with taking out a mortgage loans like yield spread premiums, originating fees, title and escrow fees, APR points and many other things. Ask your lender to tell you about every single detail that you require knowing about a home mortgage loan.
What are the documents that I need to provide to get the loan?
In order to prove that you qualify for taking out a mortgage loan, you have to offer certain important documents to the lender. Proof of income, assets, statements of expenses and debts are some of the vital documents to be shown to your lender. Apart from these, you also require showing your IRS 1099 forms.
When is the scheduled date for an HUD 1?
Do you know about the RESPA or the Real Estate Settlement Procedure Act? You have certain rights under this act and you can scrutinize the HUD-1 Settlement Statement before meeting to close the loan. This is a part of your rights and you should exercise it. Go through all the costs and ask the lender any questions that are worrying you.
How do I qualify for a mortgage loan?
The documents that you provide to the lender should meet the criteria of the lender. Apart from that you also require having a stellar credit rating, a low DTI (debt-to-income) ratio and enough net worth to qualify for the mortgage loan.
How much time will it take to process the mortgage loan application?
This answer will entirely depend on how early you supply all the required documents and on the work load of the lender and the demand for the professionals and appraisers. Usually the lender will tell you that it might take a few weeks but it can stretch to a month of two to complete the mortgage loan application.
Who's going to be the title and escrow agency?
Before taking out a home loan, there must be a title search to ensure that the real estate property is clear and free of encumbrances but this shouldn't be left to the lender alone. You should test your shopping skills and check the location and price. Check all your referrals and the people whom you trust. You should do the same while selecting an attorney or an escrow agent.
Are there any ways in which the approval of the loan might get delayed?
If you're slow to deliver the documents, fail to deliver them or you fail to check your credit report, this will delay your mortgage loan application. This is why you should assemble your documents ahead of time in order to facilitate the process of taking out a home loan.
How will my mortgage loan get sold?
In the beginning, the loan servicer and your mortgage lender will be the same. According to the federal law, you will receive a document where you need to sign that states that your mortgage is being sold. Both the new and the old servicing agency should offer you a written statement to know whom you should pay as a mortgage holder.
So, before you rush to signing on the dotted line, make sure you ask the above mentioned 10 questions to your mortgage lender.
About the author:
Guest author Stuart Parker is a contributor to a variety of financial websites and blogs. He has been working in this capacity for more than four years, helping people make wise decisions regarding their mortgage problems. You can find more of his work on this Google page.