Before committing to a loan, always discuss important matters with your potential mortgage lender. Years of your life can hinge on the questions you ask in these discussions and the answers you receive—from unexpected fees to the best form of loan for you.
If you don’t like the answers you get, keep looking for the most suitable loan until you discover a mortgage broker or lender you can trust. The more information your broker has about you, the more guidance, help, and accurate information they can provide.
Below are some of the important factors you need to discuss with mortgage lenders while you’re looking for the best home loan option.
Maximum Amount of Money You Can Borrow
Lenders will examine your income level in relation to your current debt, work status, and credit history when evaluating how much you can borrow. Before you start looking for a new house, go to a lender about getting prequalified for a home loan. This can help the entire process run more smoothly.
Although a lower down payment won’t automatically disqualify you, you may be required to pay monthly private mortgage insurance if your down payment is less than 20 percent. Other factors, such as your interest rate, terms, and monthly payments, will be influenced by your down payment’s value.
Request more information from your lender regarding the minimum down payment required for your loan. While you’re at it, ask them if you’re eligible for any down payment or cost-saving assistance programs as well. After all the information is in your hands, you can then determine what’s best for you.
Down Payment Assistance Programs
There are usually special government-sponsored mortgage programs for military veterans and first-time homebuyers. A VA loan, which offers a reduced interest rate and doesn’t require a down payment, is available to veterans and active service members. An FHA loan may also be an option if you have a low credit score and limited savings. Discuss with your lender to see what you might be eligible for.
Request a direct interest rate quote and the loan’s annual percentage rate (APR) from your lender. Because the APR accounts for fees and other loan-related charges, it allows you to compare lenders on an apples-to-apples basis. Don’t hesitate to look around until you find one that you like.
When to Lock In Your Interest Rate
Interest rates are continually changing, and locking in at a low rate can pay off in some cases. Inquire with your lender about when and for how long you can lock in a rate. Remember that lenders typically provide lower interest rates for shorter-term locks and higher interest rates for longer-term locks.
Estimated Closing Costs
You need to account for all of the expenditures associated with buying a home, especially closing charges. Loan origination fees and appraisal fees are just a few of the closing charges. Your lender will give you a loan estimate, which will show you the estimated costs of your loan so you can plan accordingly.
Other Fees You Should be Aware of
As the closing date for your purchase approaches, your lender will calculate the total amount of money you’ll need to complete the transaction and send you a Closing Disclosure. This will include any prepaid expenses like mortgage interest, property taxes, and homeowner’s insurance, as well as the closing costs shown on your loan estimate. It would be wise to compare the Closing Disclosure to the loan estimate you received to ensure that you’re aware of what you’ll actually pay for.
Many factors play a role in determining your exact closing date, many of which are absolutely beyond your control. While delays are inevitable, staying in touch with your lender and providing the most up-to-date documentation as soon as possible is the best way to avoid them. Request an estimate from your lender regarding when you can expect to close, and you’ll have a rough notion of the schedule you’re working with.
If you need a home loan in Colorado Springs, you can trust Total Lending Concepts to help you find the best one for you. We are your hometown mortgage lender, offering home loans to fit every situation. Book a consultation to discuss your mortgage options today!