Question: Libby, what kind of questions should I ask my mortgage lender when buying a house? Answered by Libby Guthrie
Hi, I’m Libby Guthrie with Keller Williams Realty in Northern California, and I’m going to give you some tips today about choosing your mortgage lender and questions to ask that mortgage lender and things to consider when you’re going to be choosing a mortgage lender.
At the end of this video, you can request our free booklet, how to avoid costly mistakes when buying a home, and we’ll be happy to send that to you.
One thing I’ve found is a lot of the buyers start out on the internet looking to see what their monthly payment’s going to be and what they can qualify for as far as a purchase price of a home. Sometimes they’ll hook up with this internet lender that’s not even in our area. And they may not even know the particulars of our area and what our tax assessments are if any, and what any normal closing costs that a seller may pay in our area, and the normal closing costs that a buyer may pay in our area.
So this, these internet lenders sometimes quote you certain amounts and when reality hits, that is not the case. So you want to make sure that whoever’s quoting you a particular rate, for example, and payment, are they quoting principal interest taxes and insurance or are they just quoting principal and interest for your payment?
Because this is the biggest investment probably you’ve ever encountered. You probably want to consider using a local competent mortgage lender that can help you, guide you through this process. Your realtor should be able to give you names of several different lenders that they’ve used in the past. And that you can sit down and you can interview these lenders and make sure that you are comfortable with them and you know their products and what kind of loan you are getting into.
Talk to these lenders. Ask them how long have they been in the business? How many loans have they done just this year? Have them give you some names of some of their prior clients. And you could call and talk to them and reach out to them and see if they were happy with this person.
Find out how they communicate. Are they going to be responsive to you? Are they only working Monday through Friday and certain times? Do they work evenings or do they work on the weekends? If they’re not available, do they have, have other team members that can help out and assistants that can answer your questions.
Another question to ask is, are they a direct lender or do they broker out their loans? That means are they directly funding the loan or is someone else going to be funding the loan and not their company? Do they have underwriting in house, meaning that the loan officer could contact the underwriter direct and speak to them about your particular loan? Is the loan officer knowledgeable about the type of loan that you need?
Some loan officers, for example, only work with conventional type financing with so much money down, and they do, do not work with FHA, VA type loans or first time home buyer type loans. So you want to make sure that they understand if you’re going to need, for example, a VA loan, a Veterans Administration loan, are they familiar with that type of loan?
Ask about paying points and would that be advantageous to you? When you pay points, that lowers your interest rate. So if your loan amount is $300,000 for example, one point would be three thousand dollars. So if you wanted to lower your rate, say a quarter of a percent, you would need to pay one point.
Are you comfortable paying that amount? Do you have that in your budget? And would it be, like I said, advantageous for you over the years to pay points? If you’re only going to be in the home for a few years, it’s probably not advantageous. But if this is going to be your forever home, it might be advantageous to you to go ahead and pay some points to get that interest rate a little bit lower for you.
Ask your lender about closing costs and make sure you understand what those costs are and what they’re for. There’s also some costs that are going to be upfront costs that could possibly affect your budget. So what that would be would, sometimes there’s application fees that lenders collect upfront. There’s also appraisal fees that lenders collect and you may not get those back if for some reason you don’t purchase the particular home that you’re getting your appraisal for, for example.
You can usually figure about two to 4% of your loan amount is going to be the amount of your closing costs, so you want to factor that in along with your down payment.
Have your mortgage lender explain that down payment to you and exactly what your closing costs are going to be. Make sure that you and your real estate agent know what the timeframe is going to be for the loan officer to be able to close your loan once you’re into contract. So you want to know that upfront, so when you write the contract and you get it accepted, you’ve put the proper amount of days in there for that contract. So that you will be closing on time because you don’t want to delay for some reason and lose out on purchasing that home.
It is pretty common and that the mortgage lenders do sell loans after closing, so be on the lookout for the notification of where you’re going to be making your payment and if you have any questions regarding that go ahead and contact your mortgage lender and verify that that’s where you’re supposed to be making your mortgage payments.
I hope this has been helpful for you, and if you have any questions regarding buying or selling a home, I’d be happy to help you out even if you’re not in the Northern California area.
My number’s (925) 628-2436. And please remember to request the free booklet, how to avoid costly mistakes when buying a home, and we’ll be happy to send that to you. Thanks a lot.
Don’t forget to request the free booklet, How to Avoid Costly Mistakes When Buying a Home at the end of this video. Thanks.