The Loan process can be somewhat daunting if you don’t know what to look for, or who to ask questions to. Here are the top 8 things I tell all my clients when they are ready to go through the application process for their loans.
1) What documents will I need in order to receive full mortgage approval?
Residence history, marital status, credit obligations, down payment, income, and employment verification are the most important information you will need for a full approval.
2) How long will the entire process take?
Communication during the process is essential. As long as you ask all questions ahead of time, and get all of your documents together during the process, then the process should be fast and easy. Your loan officer should be able to give you a total amount of time for how long it will take to close on your mortgage.
3) Are my taxes and insurance included in the payment?
If you include taxes and insurance into your payment then you will have a higher monthly payment to the lender, but you also won’t have to worry about coming up with large sums of money to pay the taxes when they are due.
4) Will my payment increase after closing?
Try to choose fixed interest rate loans. This will allow you to never have your loan payment increase over the life of the loan. If your taxes and insurance are included in your payment, then your total payment will change over time due to the changes in your homeowner insurance and property taxes.
5) How do I lock in my interest rate?
Most loan officers pay close attention to market conditions, as rates move several times a day. It’s good to know the terms and what the process is for locking in your interest rate.
6) How long will my rate be locked in?
Typically, rates are priced with a 30 day lock. You can choose to hold off temporarily if you are purchasing a short sale or foreclosure listing. The shorter the lock period is, the lower the interest rate. The longer the lock period, the higher the interest rate.
7) How does my credit score affect my interest rate?
If you have any recent changes to your credit score, be sure to get specific answers. There are many key factors that can influence fluctuation in your credit score. Fill your loan officer in on anything you can think of that might be tied to your credit.
8) How much do I need for closing?
Ask your loan officer to estimate how much you need to budget so that you are prepared ahead of closing. Your deposit, appraisal fees, and seller contributions can factor into this final number as well.
The better you understand the entire loan process, the better your entire experience will be. Remember: You can never ask too many questions.
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