Questions to Ask When Choosing a Lender

I ran across this advice in REALTOR Magazine and thought it was worth passing on.  Often times buyers, particularly first time buyers, don’t put enough effort into shopping mortgage lenders to find their best deal.  You should contact at least 3 lenders and ask these questions to determine the best deal for you.  Once you find the best mortgage product for your needs, obtain a pre-approval letter from your lender.  Your REALTOR can incorporate your pre-approval letter with your offer, making your offer appear much stronger to a seller.

Loan terms, rates, and products can vary significantly from one company to the next. When shopping around, these are a few things you should ask about.

General questions:

What are the most popular mortgages you offer? Why are they so popular?

Are your rates, terms, fees, and closing costs negotiable?

Do you offer discounts for inspections, home ownership classes, or automatic payment set-up?

Will I have to buy private mortgage insurance? If so, how much will it cost, and how long will it be required?

What escrow requirements do you have?

What kind of bill-pay options do you offer?

Loan-specific questions:

What would be included in my mortgage payment (homeowners insurance, property taxes, etc.)?

Which type of mortgage plan would you recommend for my situation?

Who will service this loan—your bank or another company?

How long will the rate on this loan be in a lock-in period? Will I be able to obtain a lower rate if the market rate drops during this period?

How long will the loan approval process take?

How long will it take to close the loan?

Are there any charges or penalties for prepaying this loan?

How much will I be paying total over the life of this loan?