3 Question to ask your Mortgage Broker or Lender

By Mortgage-Guy On February 25, 2011 Under FHA Loans, Mortgage Rates, Mortgage:Purchase, Mortgage:Refinancing, VA Loans

Deciding to purchase or refinance a home is now a much longer project than in the past. Prospective home buyers and refinanciers are often anxious and eager to secure the loan itself, and sometimes therefore overlook key issues in the process. Like simply asking some basic questions and getting straight answers.

Here are three questions every borrower should ask before signing with a mortgage lender or mortgage broker:

No. 1: What are my closing costs? While many lenders will tell buyers there are ‘no closing costs,’ fees are often added onto the backend, including government charges and application fees. To get a no closing cost option borrower would have to pay a higher interest rate so the lender/broker could absorb those charges. There is a cost. Either higher interest rate or closing cost.

You should ask for and receive a Good Faith Estimate (GFE). Thanks to some changes in the laws, GFE are generally more accurate and lender/brokers have to be more accountable.

No. 2: What kind of mortgage do I have? If you have a fixed mortgage rate, the interest cannot go up, but adjustable rates can see costs add up over the course of the loan.

Most loans now are going to be a fixed rate but there are lenders that still make adjustable rate mortgages so be sure to ask just to be safe.

No. 3: How long will my guaranteed rate last? If a broker/Lender gives you a guaranteed rate on your loan, timing is key.

Because rates are not locked in right away a typical answer might be that the rate is only good right now. Rates change everyday and sometimes more than once per day. Most changes are relatively small but you need to find out what it would take for you to “lock in that rate”. Don’t expect that a rate that was quoted to you a week or two ago is still valid. If you find what you are looking for, get it locked in.

Make sure you know the “lock in period” Don’t pick something so short that you will lose the guarantee. Usually 45-60 days would be enough time to get everything completed.