What Questions Should I Ask a Mortgage Lender? 01/25/2019 Before you choose a mortgage company, it’s important to ask the right questions. By asking these simple questions, you’ll be able to vet out the good from the bad and find a company that is right for you. What Types Of Mortgages Do You Offer? It’s important to understand the types of products that are available to you. Choosing the right product could save you thousands of dollars each year – so it’s important to understand how each could affect your short and long-term payment structure. Programs that offer low-down payments such as Home Ready can be a great option for a first-time home buyer. Other government-backed programs such as FHA or the VA Loan option for service members may also be a great fit for your needs so inquire with your lender as to which products they offer. What Is Your Annual Percentage Rate (APR)? The annual percentage rate equals the ‘cost of credit’ that is charged to you over the lifecycle of your loan. It is comprised of your interest rate, plus any additional costs (e.g. pre-paid interest or private mortgage insurance). It would seem to make sense to choose a mortgage company with the lowest APR, but beware, some companies will offer a low APR, but then tack on hefty fees and service charges later in the process. When Can I Lock My Interest Rate? Interest rates are constantly changing. They might even change between application and closing. Mortgage companies give you the option of locking in your rate a certain number of days before your closing date. It’s typically a standard 30 days, but it’s important to ask each mortgage company individually, as some can offer extensions. Also, ask if there are any fees to lock, usually the amount is refundable at closing. How Much Do You Charge For Origination Fees? Many times mortgage companies will offer low APRs, but will make up for it by charging higher origination fees. Be sure to ask each mortgage company about the origination fee to ensure you’re aware of the total costs. How Much Would You Charge For Closing Costs? Lenders will vary in the amount they will charge for closing. Be sure to look at all closing costs, so you can compare total costs between companies. How Can I Get Pre-Approved? If you are considering shopping for a home you will want to start off with obtaining a pre-approval letter. When you get pre-approved for a mortgage, it shows the real estate agent you want to work with as well as the seller of the home that you are a serious buyer and that a lender has looked closely at your credit reports, your employment history, and your income. That lender can also help you determine which loan programs you qualify for, the maximum amount you can borrow, and the interest rates you will be offered before you start your shopping process so that you know exactly what you’re able to purchase. Are You Offering Any Closing Incentives? The offering of closing incentives used to be prevalent in the mortgage industry. Now, due to stricter regulations – these incentives are hard to find. But, it doesn’t hurt to ask about incentives, but keep in mind that you should always confirm that you aren’t paying for the incentive in the long run through a rate increase. Ready to learn more about the mortgage process? Our program lender, SIRVA Mortgage, is happy to help you get started on your pre-approval or you can give one of our homebuying experts a call. We would be happy to answer any questions you may have.