What To Ask Your Mortgage Lender
Do you have a variety of loan programs to fit my cash flow and expected length of ownership needs?
If you are going to live in your new home for less than five years, you may want to consider an adjustable rate mortgage or "ARM." With an ARM your payments will be lower, but they will go up according to fluctuations in the market interest rate. Most people aren't aware that with a standard 25-year mortgage they'll be paying 2.2 times the amount of the mortgage in principal + interest payments. If you are going to live in your new home for five years or more, a traditional fixed-rate mortgage may be a better deal.
Do you offer written unconditional full mortgage pre-approvals, not just pre-qualifications?
A "pre-qualification" is usually a lender's opinion of your eligibility for a mortgage. If you ask to have a full pre-approval done, the lender will actually submit your credit history plus proof of down payment and employment to an underwriter and get an unconditional approval for your mortgage and a commitment in writing. The advantage of having a full mortgage pre-approval is that it will make your offer to buy a home stronger and it eliminates the possibility of an error in "qualifying" you for a larger mortgage than you can actually obtain.
Do you have the ability to handle difficult credit history?
Many lenders will only work with you if you have perfect credit, and if a problem comes up, they won't help you. Lenders look at your credit history to figure out how much they will lend you and how much they will charge you to lend it. Before you make an offer on a home, make sure your lender has reviewed and received approval for you and your specific credit history.
Is the rate that you quoted me the rate I will get at closing?
Many lenders advertise their rates in the newspaper and in homes magazines. These are what are called "Posted Rates" in the industry. The name says it all. Lenders will lock in, or guarantee, the rates for between 60 - 120 days. If the interest rates drop in that 60 - 120 day period, the lender will give you that reduced rate...but it can't go higher. Obviously, the longer that you can lock in the rate, the better. Ask for their rate guarantee period!