Questions to ask your mortgage broker
When you apply for a mortgage loan there are many important questions you will want to ask your mortgage broker. The questions you ask will give you a clearer picture of the mortgage you will be receiving and if it is the mortgage you want. These questions are but are not limited to the following.
Will I be charged points
Some lenders will charge points and others will not. Points are reflected as origination fees on your good faith estimate. Some brokers charge points as a fee for their service others charge them to provide you with a lower rate.
Does my mortgage have a Pre-Payment Penalty
A Pre-Payment Penalty is a fee that is charged to by the lender if you refinance or sell your home within a given period of time. Pre-payment penalties are very common with sub-prime loans. Even with a mortgage from a more traditional bank you may have or want a pre-payment penalty. There are very few circumstances where a pre-payment penalty will interfere with your future plans. Accepting a pre-payment penalty may also lower your points and/or rate on the loan.
Something to ask your mortgage broker is:
What will my total closing costs be?
Your broker, or any mortgage loan officer, is required to provide you with an estimate of your closing costs within 3 days of loan application. This is a great time to review what this home-loan transaction is going to cost you and ask questions about any fees or charges that you are unsure of.
May I see the Amortization Schedule?You may want to ask your mortgage broker for the amortization schedule. This gives a clear and concise 'Landscape View' of the amortization. For most non professionals, it is easier to spot term and rate adjustment properties of the loan this way.
How Long is my rate fixed for
It is better to ask how long your rate is fixed for because it forces an honest answer. More unethical brokers may respond to the question, "Is my rate fixed or adjustable" with something misleading like, "You have a 5 year fixed 30 year mortgage." While many people might misinterpret this to mean that it is fixed for 30 years and not hear or understand the 5 year comment, the truth is you are getting a 5 year ARM. If you ask, "How long is my rate fixed for" the same broker might be more compelled to answer with "5 years" indicating that the loan is adjustable.
How long is my preapproval good for?
The length of a preapproval letter can vary, in general they are good for 30 days. If your preapproval letter expires, you will need to become prequalified again by your mortgage professional.
Does my loan have a pre-payment penalty?
Some loans come with a pre-payment penalty and should be disclosed when being presented to you as an option. A loan which has a pre-payment penalty feature may reduce your interest rate or cost, but it may also cause you problems if you decide to sell your home or refinance before this pre-payment period is up. A pre-payment penalty can be as much as 6 months of interest payments.
Will you sell my information to other loan officers?
This question is especially important if you are applying for a mortgage online. Many mortgage websites on the internet are "leads" companies that gather and sell applicants' information to other mortgage companies for a profit. These "leads generating" websites often advertise to have multiple lenders competing for your business. The truth is they would sell your information to various companies. To avoid having your information being sold and resold, and being harassed by endless phone calls for years to come, work only with mortgage brokers and lenders who do not sell your information.
How long is my mortgage fixed? How often can it adjust? How much can it adjust for any one adjustment? What is the lifetime limit on the rate? What would my payment be if the rate were to go that high?
You need to know these answers for Adjustable Rate Mortgages. You need information about how your payment would rise in a worst case scenario so you can make an intelligent, informed decision. A good experienced loan officer can quickly calculate these numbers for you.
» DISCLAIMER: The information contained in this article on 'Questions to ask your mortgage broker' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.