Questions You Should Ask
Author: Ryann Cairns
When Obtaining a Mortgage Loan Many homebuyers, especially first time homebuyers, are so excited and nervous at the prospect of purchasing a home that they sit in the lender’s office, glance over a ton of official looking paperwork, sign on the bottom line and never really give any consideration to what they should be asking the lender before they make that all important final step in the mortgage process.
While the lender will be asking you for a lot of background information in order to insure you are the best fit for the money they will loan out, there are critical questions you should ask the lender as well. Failure to ask mortgage lenders the right questions can result in misunderstandings and ultimately the loss of a significant amount of money. Doing your research, asking the questions, and taking the time to understand the mortgage loan you are being offered will result in substantial savings, both in money and headaches.
First, find out exactly how long it will take to process your mortgage. If you are obtaining pre-approval to purchase a home this may not be as critical, but if you have already placed an offer on a home with a contingency of obtaining financing, this can be critical. The deal can be lost and someone else may buy the home out from under you while you’re still waiting around for the underwriting to go through. So, save yourself the headache and get a clear idea up front of how long the lender expects the process to take.
Secondly, ask the lender if there will be any kind of pre-payment penalty on the mortgage loan. Sure, you’re not thinking about paying off the loan now. Today you’re just thinking about getting approved and then making the monthly mortgage payments. However, there may come a time in the future when you either have an opportunity to pay off the balance of the loan or you wish to re-mortgage. In either of these instances, the existence of a pre-payment penalty on the mortgage loan will become crucial. It’s best to find out now rather than later.