Whether you are buying a home for the first time, looking to refinance your mortgage, or taking a second mortgage, a mortgage broker can help you. One of the reasons people work with mortgage brokers is because they help steer home buyers to the right lenders. It is therefore important to work with a mortgage broker you are comfortable with, even if you do not like the answers you get. Keep in mind that the more the broker knows about your financial situation, the better the advice you will get. Here are some of the questions you should ask before working with a mortgage broker.
What Fees Are Involved
There are different types of fees involved in the home buying process, such as origination fees, appraisal, inspection, and credit reports. Each lender charges differently, but that amount will eventually contribute to how much money you have to pay during closing. Ask the broker for things like these, then compare the different fee structures offered by the various lenders.
What Loan Type Is Best For You
A lender should have information about you before recommending loan options. Therefore, work with a broker that collects enough information from you before telling you which type of loan to go with. For instance, borrowers that want to minimize their interest rate and repay their mortgage faster can consider a 15-year mortgage. But that option is only practical if one is not planning on selling the house in a few years. On the other hand, a person with a smaller down payment or some credit challenges might want to try FHA loans. These are some of the details a broker needs to assess to find the right mortgage for you.
How Much Down Payment Is Needed
Even though the popular answer to this question is 20%, this is not a must. There are people that put more and others less. Some lenders can still give you a loan even with a down payment of 3%, but this has some pros and cons. The advantage is that you get to buy a house sooner. The downside is that you may pay for private mortgage insurance. This means more closing costs and higher monthly payments. Before rushing to take that low down payment, consider the long-term cost as well.
What Is The Best Interest Rate You Can Get?
Do not forget to ask about the interest rate or assume that the rates quoted by the bank apply to you. Such rates are for people with high credit scores and a consistent income. Johnantle.com suggests talking to the broker to know what is the best rate you can get depending on your situation.
Can You Lock Your Loan
Interest rates change or fluctuate. Ask whether it is possible to lock your loan if you believe that interest rates are increasing. When you lock your loan, you are sure you will pay lower interest rates should the rates go up when you are ready to close.
Having the correct information in your hands makes it easy to make the right decision. Do not be afraid to ask the mortgage broker these questions before proceeding with the home buying process.