When you’re buying a home for the first time, it can be easy to get overwhelmed by the entire process. The best thing you can do for yourself as a first time home buyer is to stay informed with the help of a mortgage lender. Don’t go blindly into a huge commitment like securing a home mortgage. Your mortgage lender can keep you in the know on all the important details throughout the loan process. Here are some questions you can ask your mortgage lender before finalizing any deals on a new home.
What type of loans do you offer? What are the qualifying guidelines for each?
There are many different types of mortgages, such as fixed-rate, adjustable rate, Federal Housing Administration, Veteran’s Association, and many more. You need to know what loan your lender can offer you. Have your lender take the time to explain each one to you, listing the benefits and shortfalls of each. Make sure your lender isn’t just pushing their own agenda. They should only recommend specific loans after learning about your particular needs and qualifications.
What is the interest rate and the annual percentage rate (APR) for the loan?
You interest rate will be based on both the size of the loan and your credit score, and accrues over the life of the loan. The APR includes both the interest rate and all other lender fees, divided by the loan’s term. Over the course of a 15-30 years span (a common mortgage span), your interest can add up to a considerable price. You need to know what your future holds, so ask your lender about this. If the interest rate is adjustable, ask how long the rate will remain fixed, and about the maximum annual adjustment, highest rate (cap), index and margin.
What’s the monthly payment going to be?
Knowing your monthly expenses is crucial to planning a budget after your home purchase. Make sure to have your lender include taxes and insurance in their calculations. Your monthly payment shouldn’t be so large that it is burdensome to keep up with or so that you can’t budget for things like unexpected expenses or a retirement fund.
Is there a prepayment penalty?
If you expect your economic situation to change in the future or want to save up to make some extra mortgage payments, it is important to make sure your lender won’t penalize you for paying off the loan early. Some lenders charge an additional processing fee for each overpayment, while others ask for six months of unearned interest. Others only charge a penalty if you pay off your loan before the first two to five years. Verify if your monthly payments will adjust in line with any additional payments you make and if the penalty applies if you decide to refinance later on.
Don’t be afraid to ask questions or request documentation from your mortgage lender. A good lender will take the initiative in communicating key concerns with you and keep you informed throughout the loan process. Being informed can help take some of the pressure off of making a big decision which then allows you to make the best decision for your future.
If you have more questions about the particulars of home buying, call on Stonebridge Mortgage Group to help guide you through each step of the home buying process. We help you get pre-approved for a mortgage. We can help with your real estate loans and mortgage solutions, both residential and commercial. Stonebridge Mortgage Group serves the greater Portland area and we are located in Gresham, Oregon.
IMG SRC: CreditRepairExpert