The Dating Game: Mortgage Lender Edition Part I
It’s finally happened, you have reached a point in your life where purchasing a home is a very real option. Of course, you’re going to need a loan to obtain the full purchase price; how do you decide which mortgage lender to go with? Like most things in life, it pays to interview multiple candidates and ask the right questions. This article will briefly discuss the questions you should ask your potential mortgage lender to make sure you have obtained the very best terms you can.
What Are the Different Kinds of Home Loans They Offer?
Lenders come in two basic forms, the lender who offers all kinds of mortgage options and the lender who specializes in one or two lending options. It does you absolutely no good to go with a lender who doesn’t provide the type of loan you need, here are the most common forms of a home mortgage:
Adjustable-Rate Mortgage (“ARM”): This type of loan has a very appealing interest rate during the introductory period, which ranges from 2 to 5 years, then the rate becomes adjustable; this rate has a maximum amount and is dependent on the market conditions at any given time.
Fixed-Rate Loan: This is the standard mortgage with a set interest rate over a 15- or 30-year period.
VA Loan: If you or your spouse has served in the military, something known as a Veteran’s Affairs Loan may be available. If you qualify, the VA guarantees your loan, which makes it much easier for a lender to make a risk-free home loan.
FHA Loan: This loan is designed to assist prospective home buyers with low income. The FHA loan allows you to put down as little as 3% on a home.
What Type of Loan Is Best Suited for Your Goals?
Any mortgage lender worth their salt should be able to look at your application, which shows employment history, income, assets, debt, credit, expenses, and many other aspects of your financial picture, and provide you with a straightforward answer to this question.
What Are the Closing Costs for This Lender?
As a general rule of thumb, closing costs account for approximately 3.5% of a house’s selling price and consists of fees paid to a lender and other parties to complete a sale. In most cases, these costs are frequently negotiable, and is therefore another factor to consider when choosing a mortgage lender.
How Long Will it Take to Complete the Mortgage?
On average, closing on a house takes 50 days; this may be too long in particularly hot markets. In those circumstances, it may behoove you to place an emphasis on finding a lender who can complete a mortgage within 30 days or less. It is important to note that loans, such as an FHA loan, may take up to 60 days to complete; if the house requires repairs to pass inspection, this time will get even longer.
This is just a brief list of questions you should ask your mortgage lender, and we will discuss more questions in subsequent articles. At the Chernov Team we understand that knowledge is power. Whoever shows up to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.