1.
Will There Be an Additional Charge to Lock-In an Interest Rate
and Discount Points?
Since rates fluctuate daily, Most lenders offer a lock-in policy
that guarantees your quoted interest rate and points will not
change for a specified number of days. Allowing you time to organize
your documents and shop other loans before applying with this
lender. By paying a one time lock-in fee you may be able to save
you thousands if the interest rate rises during the time you are
locked in.
2.
How Many Points Will Be I Charged?
The answer
to this question will vary from lender to lender. A point is calculated
as one percent of the loan amount. Points charged are additional
to the interest rate that is charged on the loan. A lender often
makes his fees by charging points or to negotiate a lower interest
rate. Be careful with this because a loan with a low interest.
3.
What Will Be The Interest Rate & Annual Percentage Rate for
This Mortgage?
The
answer to this question will allow you to compare the loan costs
of this particular mortgage with other loans you may compare against.
Your loan APR is figured by combining the interest rate, points
and other fees divided by the loan’s term to give an annualized
rate. A low interest rate and high points could end up costing
you thousands more than one with a higher interest rate but low
points.
4.
How Long Will it Take to Process My Mortgage?
Processing
is the time it takes from the day you submit your application
to the time your loan is approved. The time it takes to process
a loan will vary for different loan types and among lenders. Normally
loans should be funded within 7 to 10 working days, unless there
is a problem with your application.
5. Will I Be Charged For Private Mortgage
Insurance (PMI)? And If So, Can I Finance the Upfront Premium
into the Loan Amount?
If you’re
unable to put a 20% down payment on your new home, you will be
charged PMI (an insurance premium to protect the lender in case
you default on the loan). If you are charged this, find out if
you can add these premiums into your financing.
6. What Are The Total Closing Costs?
Be sure and
get this in writing within 3 days of applying for the loan. If
they can’t provide this within 3 days…the lender has
broken the law. When a list of closing fees are provided, be sure
you understand each fee. Sometimes lenders will tack on unnecessary
fees to boost profit. Lenders charge fees for the services incurred
to process and close your mortgage. Also, make sure the closing
costs that were presented to you in the beginning match the closing
costs presented at closing.
7. Is There a Pre-Payment Penalty?
This is a penalty
some lenders apply to your loan if you decide to pay off your
loan early. Either by making bi-weekly payments or 1/12 extra
payments (see table of contents). This is important, since you
will want to pre-pay your loan in order to eliminate costly interest
overpayments. Most lenders don’t charge a pre-payment penalty,
so there is no need to go with a lender who charges this.
8. Rapid Loan Approval
Be sure and
ask your lender if they utilize Rapid Loan Approval Software.
This computer software allows lenders to determine a borrowers
credit risk instantly. Allowing for them to approve a loan within
hours or even minutes. Look for a lender who utilizes this software.
It will save you valuable time especially when shopping for the
best interest rate
