When you work towards buying a home, there are a number of questions you would typically ask yourself. Then, there are also questions you should be asking of those helping you to secure your home. In fact, you need to feel that you can ask as many questions as it takes to feel comfortable and confident in your decision. While some lenders, such as Altrua Financial, will encourage you to do this, with others, the process can be more challenging. Here are four questions you should definitely ask your successful mortgage loan officer as you complete the process of securing a loan for your home.
1. How Many Discounts or Origination Points Will I Need to Pay?
Depending on your loan and lender, you may need to pay discount or origination points, and maybe even both. If this is true of your mortgage loan, you should know that one point is equal to one percent of your loan. Discount points result in a deduction of your interest based on how much interest you’re paying on your loan. They’re tax-deductible, too. With regards to origination points, they’re the fees you pay lenders for getting the loan process started.
2. When can I lock in an interest rate, and how much will it be?
Once you know your interest rate, you should then find out when it can be locked in. This is because interest rates can change significantly from the moment of your mortgage application getting underway to when the loan is finally closed. You can lock in the interest rate you receive, in addition to any points you want to use. Be aware, however, that there’s a time limit on your points and lock in rates, so you should plan accordingly. You may need to pay a locking-in fee, but it could be worth it in the long run.
3.What’s the smallest down payment I can make?
There are different requirements for a down payment for different mortgages? So make sure you’re aware of any requirements and that you meet them prior to signing any paperwork. In the majority of cases, you should make as large a down payment as you can in order to minimize the amount you need to borrow. You can also look into a USDA mortgage as USDA Loans are 100% no money down loans with many other features that may be attractive to you in the home buying process.
4. What’s the average interest rate?
Mortgage interest rates are constantly changing, so an average interest rate doesn’t exist. This is why it’s important to make sure that your interest rate is locked in when speaking with your mortgage loan officer. This way, should there be an increase to your rates, the rate will remain locked in to the original number stated. While your interest rate will likely appear on the mortgage paperwork, it’s imperative that you request a breakdown of the rate if it isn’t detailed on your loan forms. You should specifically ask for clarification over whether the rate includes the interest rate, in addition to other charges you need to pay.