3 Questions Homebuyers Should Ask Lenders

Before selecting a mortgage lender, potential homebuyers should do some comparison shopping

3 Questions Homebuyers Should Ask Lenders
May 5, 2016

When preparing to select a mortgage lender, potential homebuyers should do more than simply get quotes from several different lenders. While that is a good place to start, there are other key pieces of information that a borrower needs in order to be able to fully compare the different lenders and what they offer.

Firstly, borrowers need to be clear on how lenders factor points into their quotes. By paying points on a mortgage, borrowers can get lower interest rates. However, many borrowers do not fully understand how the points system works or if the lender has included points in their quotes. Borrowers should make certain they understand if the lender is expecting them to pay into the points system or not prior to signing any paperwork.

Secondly, borrowers should ask about the down payment and how it will affect their fees or the Internet rate on their mortgage. While traditionally buyers would put down about 20 percent of the property cost, that is no longer true. However, many who do make a much smaller down payment are required to get private mortgage insurance. Borrowers should ask about this and how their fees will change, if at all, if they pay less of a down payment.

Finally, borrowers should ask if the quote the lender is giving them is locked in and, if so, for how long. Some lenders do not lock in the quote for very long, resulting in the borrower getting a very different rate when they actually apply for the mortgage.

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Erin | 05.05.16 @ 17:03
I have never understood how points work, and I would definitely read up on them before going into another mortgage (we didn't use them for our first). It is definitely a good practice to learn as much as you can about the whole process before entering into a mortgage. Thanks for the tips!
Carla Truett | 05.05.16 @ 17:03
Always do your research. It will benefit you in the long run for sure. These are great questions to start with. I wish I had done a lot more research when we bought our home but we got caught up in the excitement as many do.
Zanna | 05.05.16 @ 17:04
The "locked in" question is very important, I agree! It's not something we were aware of when we were looking at buying a house and it can make a big difference in costs if the rate changes significantly.
Steffanie | 05.05.16 @ 17:04
This is great information and will be helpful for my daughter. We will be doing more research together.
Elaine | 05.05.16 @ 17:05
Oh my their points have always been confusing to me. Good idea to know more before taking this process.
Stokes | 05.05.16 @ 17:06
Great information for people looking at mortgages.
trish | 05.05.16 @ 17:08
Great advice. So glad to have a best friend who is deeply involved in real estate! She helped us through all of this
Heather | 05.05.16 @ 17:14
While these are good questions to ask you also want to factor in How busy your lender is. If it takes them several days to get back with you on your questions do they really find your business important?
$commenter.renderDisplayableName() | 12.03.16 @ 15:43
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