A house is likely your most valuable (and most expensive) asset, so it’s a good idea to know as much as possible about your home loan before you rush towards closing day.
When you speak with a mortgage lender, here are 10 questions you should ask to ensure you’re clear on what your options are when buying a home.
What type of mortgage loans do you offer?
Different mortgage lenders offer different types of mortgages. These can loans differ in the amount offered, interest rates, length and payment type. Common mortgage types include the following:
- Federal Housing Authority (FHA) mortgages
- Veterans Affairs (VA) mortgages
- USDA mortgage
What type of loan is best for me?
Your mortgage lender should be able to answer this question once you’ve completed an application and the lender looks at your income, assets, credit, debt, expenses, available down payment and monthly payment budget.
What are the full costs of my mortgage?
A Loan Estimate (formerly known as Good Faith Estimate) is a line-by-line estimate of mortgage costs and shows your estimated cash to close which also includes your down payment. Use this as a shopping tool to compare rates and expenses from various lenders.
When you’re ready to close, a document called a Closing Disclosure (formerly known as a HUD-1 Settlement Statement) will be given to you.
When will I get the Closing Disclosure (CD)?
Under recent changes, you are required to receive and sign the Closing Disclosure at least 3 business days prior to closing.
What documents do I need?
You will need documentation for your income and assets and will need to tell the loan originator where you have lived and worked for the past two years.
What are the qualifying guidelines for this loan?
Many mortgage lenders require borrowers to meet certain guidelines. For example, VA loans are only available to eligible veterans, while qualifying mortgages have their own list of restrictions. Your lender will be able to tell you which loans you qualify for.
How long will it take to process my loan application?
The answer depends on how quickly you supply the required documents and the demand for inspectors, appraisers and other professionals involved. In general, it can be a few weeks to a couple of months.
What can I do to avoid slowing down the process?
While your mortgage lender will have specific recommendations to ensure speediness, here are some general recommendations:
Fully complete all required documents.
Be readily available to answer any questions.
Be prepared to explain any past credit issues.
Go over your credit report for errors.
Do not take on any new debts, switch jobs or change careers during the process.
What are the chances my loan will get sold?
There’s no way to tell, but if it does happen, don’t panic—it’s normal.
If it happens, the old and new servicing companies must notify you in writing of any changes so you know who to pay and how to proceed.