Buying a house is a huge investment that can’t be accomplished overnight. Unless, of course, one has a lot of money to spare. But often, home buyers spend years saving up money to pay for the underlying expenses involved in buying a home. Some choose to borrow the money by applying for a home loan.
A mortgage or home loan takes a home buyer several steps closer to buying their own home. This is because they have the option to borrow the money from a lender and pay partial amounts up to a certain period. But choosing a mortgage lender is something that should be given much thought.
Loan options differ in terms of the amount of partial payments, period, and interest rates. These differences can either be beneficial or burdensome for the borrower. That’s why a person applying for a home loan should choose his or her mortgage lender wisely. If you’re thinking about applying for a home loan, here are some questions that you should ask your potential mortgage lender.
How do I qualify for your loan options?
Not everyone can qualify for a loan. Lenders would require some qualifications like income, credit standing, and financial status, among others. If their criteria are not met, they cannot approve the loan as they want to make sure that borrowers will be able to pay when required. Remember that we’re talking about a large sum of money, so it’s understandable that lenders will not take it lightly.
The first and foremost thing you should ask a mortgage lender is how you would qualify for their loan options. Ask them what they require from borrowers. This will give you an idea of whether or not you can apply for the loan, and you’ll also get the opportunity to prepare the needed requirements.
What is the interest rate?
A huge bulk of the amount that borrowers pay consists of interest. This is the fee that lenders require for their lending services. That means that the total amount that a borrower needs to pay does not only cover the principal value of the home but much more, depending on the rate of interest. Lower interest rates are ideal for the borrower, so it’s essential to ask the lender about their interest rates.
What are all the costs involved in the loan?
Aside from the rate, there are also several payments that will be required from the borrower. Examples of this are appraisals and taxes. To give you an idea of the overall fees you will be paying, you should ask the lender about the other costs involved in the loan. After all, lenders are required to disclose a loan estimate to their borrowers.
How long is your processing time?
Getting a loan can’t happen overnight. Lenders would follow an extensive approval or denial process in order to secure themselves and verify the borrower’s ability to meet the requirements. Because of this, loan processing would take an average of 30 days before approval.Asking your mortgage lender how long they need to process your application will let you know how much time you have to prepare for down payment fees and other requirements.
Understand that you are not limited to these questions. Mortgage and home loans are complex, so be sure to ask anything you’re unsure about to help you make an informed decision on your investment.