6 Important Questions To Ask When Getting A Mortgage Loan
While you may not have all of the money to buy your home in one go, you might consider applying for a mortgage loan. Understandably, loans can be very tricky and intricate things to navigate. This is why we have provided six vital questions anyone in the housing market should raise when pursuing a loan.
1. What documentation is required?
This is likely to be one of the most pressing questions you ponder. Any competent mortgage officer will let you know before you ever need to ask them. While there are various types of loans, here is a general breakdown of what you may need.
- ID. Something that proves you are you.
- Proof of income. 30 days of paystubs, tax returns from the past two years along with W-2s, plus any other relevant documentation, etc.
- Bank Accounts. Bank statements from your last two cycles plus anything linked to investing or retirement.
- Proper Statements. Basically, an indicator of how your last home was settled, if applicable.
- Miscellaneous. Letters verifying financial help from family, landlord information, letters explaining credit issues, divorce papers, etc.
2. Which loans would best suit me?
Be wary of officers who start the sales pitch before you make your case. Let your lender understand your financial situation so he can give you insight. The best brokers cover every aspect of loan programs ideal for your needs.
3. What will the down payment be?
While 20% down is often sought after, it has mostly endured today as a myth. Some lenders will even deal with you with only 3% down; much like FHA or VA loans, you can get loans with 0-3.5% down. Also bear in mind that if you can put 20% down, it may be prudent. Going in for less than 20% can take a toll in the long term when it comes to PMI payments.
4. What about special programs?
There are more than 2,500 different home-buying programs, meaning there is a good chance that at least one applies to you. The best lenders will have a thorough knowledge of programs for you. If your lender seems either clueless or disinterested in assisting you, go elsewhere.
5. What about an origination fee?
This fee is incurred by lenders to establish loans. If your lender charges one, the amount will vary by lender. Do not treat it as a final offer; try and negotiate for something better.
6. Are there any other fees?
Lender fees are inevitable and how lenders can go above and beyond receiving the interest you are putting toward the loan. Look over different providers and figure out which lender gives you the best overall deal. Inquire as to how soon the lender can get you a loan estimate, also known as a "Good Faith Estimate." The GFE was intended to encourage buyers to shop around and self-educate on housing finance. This loan estimate should be provided within 3 days of completing your application.