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.