Questions to Ask
Your Loan Originator will be happy to answer any question you may have about the mortgage loans they offer. If you plan to talk to other lenders, be sure to ask these questions.
What Loans Are Offered?
Know your choices. Look over the types of loans explained in this booklet and make sure other lenders have the kind you're interested in. If a lender offers you a loan that's not mentioned here, make sure you know how and why it's different.
Is There an Interest Rate Lock-In Policy?
Ask if the quoted rate is guaranteed, and for how long. Is there a written lock-in agreement?
Does the Loan Have a Call Option?
A call option would allow the lender to require you to pay off the full loan balance at a time before the full term of the loan.
Will Discount Points Be Charged?
A point is a fee the lender charges. It equals one percent (1%) of the amount borrowed. One point on a $45,000 loan would be $450. How many points are charged depends on the lender. Points are paid at closing, either by the buyer, the seller or both. Lenders may offer lower interest rates with higher points, or vice versa.
What Will Your Closing Costs Be?
These are expenses that must be paid when a loan is closed, title transferred and loan money given out. These expenses may include an origination fee, appraisal fee, credit report, attorney fee, title insurance, recording fee, survey, termite inspection, etc. Your lender must give you an estimate of the closing costs within a few days after receiving your application.
What Pre-Paid Items Will There Be?
When you close your loan, you will be required to pre-pay some of the expenses that will come up in the next year. Taxes and insurance are examples. You may also have to pre-pay the interest on your loan from the day the loan closes until the end of the month. That's called "accrued per diem" interest.
How Long Will Loan Approval Take?
This can be very important, especially if you need to close on a house quickly. Processing and approval times are different for different lenders. Be sure to ask how much time to allow.