A home loan may be the largest single dollar amount that you will request. The process of securing a home loan can be very intimidating. The finance representative that may be processing your loan may not be as accessible as you would like and he or she may use terms with which you may be completely unfamiliar or have only heard of simply in passing. So, when you have the finance representative’s attention, make sure that you have a list of questions that you would like answered and/or ask the representative what to expect at each step of the process. In addition, ask how many days or weeks it will take to progress from one step to another.
Briefly, as a word to the wise from consumer advocates, get your financing prior to looking at homes and do not purchase homes that are at or above the maximum of what your home loan company will finance. By securing your home loan prior to looking at homes, your “eyes don’t get bigger than your stomach.” In other words, you will save time by realistically looking at homes you can afford. In addition, you will not be “house poor.” “House poor” is when an over realistic amount of your income goes to service your mortgage payment.
Take a look at some of the questions you should ask your lender or broker.
What are the various types of loans available to me?
If you are a first-time homebuyer or a member of a “disadvantaged” group, you may be eligible for down payment assistance.
What are the terms of the loan?
Ask the loan officer to run various scenarios for you based upon 15-year, 30-year, interest only, fixed rate, or adjustable rate loans. Ask for the different down payment options. Ask about Private Mortgage Insurance and the requirements of coverage.
Is there a prepayment penalty?
You do not want to be penalized for paying off the loan early. If there is a prepayment penalty ask your lender to remove this condition. With interest rates changing frequently, want to be in a position to secure a new loan at a lower interest rate in the future without heavy penalties.
Who can I contact to get updates regarding my loan?
You need to be able to contact an alternate in case the finance representative is out-of-pocket for an extended period of time.
How long does it take for approval?
You need to know what to expect from your finance representative to hold him/her accountable for completing the loan process and keeping you informed.
What documentation do I need to supply?
The finance representative may need bank statements, W-2s, employment information, etc. in order to submit the loan request for processing.
These are some of the questions that you should ask your finance representative when requesting a home loan. Do not be intimidated or insecure about the process. Ask questions over and over until you are comfortable that you understand the process. You are the customer and you have a team of individuals from the real estate agent to the closing attorneys who are ready to assist you in getting your own home.
This article is compliments of Hunter Taylor.