Are you thinking about buying a home in Bristol, Abingdon, Marion, or the surrounding areas? Since many people do not have enough cash to purchase a home, talking to a mortgage lender is the first step in the home buying process for those requiring financing. Finding the right mortgage type and lender to meet your needs is essential. However, many may not know how to effectively compare mortgage lenders when deciding on the right one for you. While you may know some questions to ask each of your top lender choices, here is a list of the top 9 questions you should ask a mortgage lender before making your final decision.
1. What loan type options do you offer?
Oftentimes, lenders offer a wide range of mortgage products, but some lenders may specialize in only a few home loan types. If you already know the mortgage type you need, it is necessary to work with a lender that offers that type. Realtor.com gives a quick overview of these common loan type options:
- Adjustable-Rate Mortgage (ARM)
- Fixed-Rate (Conventional)
2. What documents and information will I need to provide?
There is a lot of paperwork involved with applying for a home loan. Therefore, knowing what documents and information are needed by the lender upfront can save you a lot of hassle when you find the right home.
3. Do you offer any down payment assistance programs?
If you need help with making a down payment for your home purchase, working with a lender that offers down payment assistance programs can help. Many of the local lenders across Northeast Tennessee and Southwest Virginia offer programs with low to no down payment options.
4. What is the best mortgage type for me?
After completing a loan application with the financial institution, your mortgage lender should be able to tell you what home loan would be the best fit for your situation.
5. How long will it take to complete a mortgage?
The typical closing on a home purchase takes between 30-60 days. In a hot market, like we are currently seeing, working with a lender who can quickly complete a mortgage can help make your purchase offer more appealing. However, it’s important to note that some loan types take longer to process and close because of the requirements that must be met.
6. What are your typical closing costs?
When purchasing a home, buyers are responsible for their own closing costs, unless a prior agreement was made between buyers and sellers. Closing costs will consist of fees paid to the lender, title company, closing attorney, inspectors, and other third parties helping facilitate a home sale.
Typically, buyers’ closing costs are around 3%-4% of the home’s sales price. Asking for good-faith estimates from lenders will give you an itemized list of their closing costs to ensure you are not surprised by any fees when closing time comes.
7. What do you charge for a mortgage rate lock?
Since interest rates fluctuate, having a mortgage rate lock will ensure your rate does not change if you close on a home within a set time period. A rate lock is a commitment by the lender to give your loan a specific interest rate and is often offered for 30-days at no additional charge. However, some lenders may charge a fee for mortgage rate locks or to extend the rate lock after the initial X number of days.
8. Is underwriting done in-house?
Underwriting is the first step when processing a home loan to verify your assets to obtain a loan and helps the lender ensure they can issue you the funds for a home purchase. Some lenders complete underwriting in-house, while others outsource the task to third-party underwriters. Working with a lender with in-house underwriters can help speed up the process as communication between the underwriter and loan officer will often be more direct and quicker.
9. How do you communicate with your clients?
Working with a lender who strives to stay in close contact with their clients and gives periodic updates ensures you’ll stay in the loop throughout the entire process. Also, finding a lender who is easily reached when you need them and welcomes all your questions is important.
Ready to start the home buying process and need local lender recommendations? Contact us today. We can give you a list of mortgage lenders to help you find the loan type best for you and get you pre-approved for a home loan. Then, we’ll be there throughout the home buying process, from finding the right home to celebrating at closing and everything in between.