Five Questions to Ask your Lender

Five Questions to Ask your Lender

Thanks to the current low interest rates and flexibility, it is a perfect time to borrow money to purchase the home of your dreams or an investment property.  There are at least five questions to ask your lender that will help you decide if they are a good fit. The more you know and the better questions you ask, the better the terms you can possibly get.

What I Need to Go Forward?

Put simply, everything that is needed to proceed with the loan from tax returns, bank statements, and so forth. To know that upfront can save you a lot of time and effort so get a checklist from the lender.

How long will the Interest Rate Hold?

In this day and age of market volatility, it pays to know your interest rate and how long it will stay in effect. Just as important, what factors will upset the interest rate so that you can be better prepared. If the rate is based in part on your credit sore, then how does improving your score lower the rate?

Keep in mind that you can always shop around for a better rate, but in most cases the difference will be just a quarter-percent. Try to get a fixed interest rate if possible so the interest does not sky rocket down the line where you can no longer afford the property.

Describe the Terms?

You will want to review all the pertinent terms to the loan in which you are applying. This means reviewing the summary of the terms as well as the fees which apply. This happens before the loan is finalized so that you can look it over and see if there is anything disagreeable or unexpected. You may want a professional to look it over as well such as your lawyer or accountant because they may be able to catch something you did not. Anything that you do not fully understand or something that catches your eye needs to be explained before you sign on the dotted line.

What are the Closing Costs or Fees?

This is very important and often overlooked as there is such attention paid to the structure of the loan itself that you may not be focused on the closing costs or the fees associated with finalizing the loan. By law, the total amount of the fees that are presented at the time the loan is submitted must be within a certain percentage of the real numbers according to the HUD statement. Knowing this lets you shop around for different closing costs on loans.

How Long Will it Take For the Loan to Be Approved?

If there is a major difference between most lenders, it is the length of time it takes to complete the lending process. You may find that the difference is in terms of weeks thanks to how busy the lender is, how your income is received, the appraisal process, and so forth. Before making any commitment, be sure to ask for a timeframe so you can know roughly how long it will take. After all, a process that takes weeks or a month less than another lender you talk to is far more desirable.