Posted by Craig Meaney ● April 19, 2017

10 Essential Questions to Ask When Applying for a Mortgage: Part 1

Girl wondering which questions she needs to ask about her mortgage!Whether you’re ready to buy a home, considering a refinance, or simply weighing your mortgage options, arming yourself with the right questions will benefit you greatly in the long run. Before you sit down to speak with your mortgage banker, take note of these 10 questions to enhance your lending knowledge and prepare yourself. Find questions 1-5 below, and a link to questions 6-10 at the end of this blog!

 

1. Which Type of Loan Is Best for Me?

There are a number of loan options available, and you’ll want to discuss them with your mortgage banker before making a decision. One of the main decisions you’ll need to make is whether an adjustable-rate mortgage or fixed-rate mortgage better suits your situation and needs. A great resource for weighing your options in this area is our Fixed Rate or Adjustable? decision-making guide. Beyond the rate-type you choose, you’ll also want to discuss the effect different loan terms (i.e. 30-year, 20-year, 15-year) will have on your larger financial picture with you lender.

2. What Documents Are Required?

Throughout the loan process, you’ll want to be prepared to fulfill documentation requests from several members of a lending team, including the loan processors, mortgage banker, mortgage planner, and underwriter or your loan. The documents required will vary depending on the loan for which you’re applying; however, the most common documents include pay stubs, bank statements, and tax returns. For a full breakdown of what’s required, check out our free checklists of the documents required for a purchase loan, refinance, and during a divorce.

3. What Costs Are Involved?

Prior to a loan closing, you will be required to pay some costs up-front. These may include appraisal fees, credit report fees, and application fees. Discuss all these costs with your mortgage banker to determine how much money will be required prior to the loan being approved. You'll also want to discuss any funds that will be required to complete the loan closing. Looking for some more background on closing costs? Check out our closing costs page!

4. How Does The Appraisal Process Work?

Lenders require a property appraisal as an objective way to estimate the fair market value of a property for both a home purchase and mortgage refinance. Typically, a lender will maintain a list of reliable and reputable professional appraisers who are experts in the local market, and supply those lists to the mortgage bankers. In turn, those mortgage bankers will assign one of these appraisers to review the property. Bearing in mind this established procedure, lenders generally save the borrower time by arranging for the appraiser on the borrower’s behalf.

5. When Will I Get a Loan Estimate (LE)?

If you’ve bought a home before, you may be familiar with the term Good Faith Estimate (GFE). In October of last year, Loan Estimates replaced GFEs as an easier-to-understand document because of new lending rules called TRID (TILA-RESPA Integrated Disclosure). A Loan Estimate is a three-page document that a lender must provide within three days of receiving your application. It will include estimated interest, estimated monthly payment, and estimated closing cost. It is important to bear in mind that a Loan Estimate is just that: an estimate. Actual costs of your loan may be slightly higher or lower.

Looking to Learn More? 

We know, we know.. it’s a lot to take in! Never hesitate to ask your mortgage banker to help you answer these questions or anything related to them during the application process. Already prepared to take on questions 6-10? Simply click below!

Read Questions 6-10 

Topics: Appraisal, Mortgage Tips, GFE, Closing, Mortgage Application, Closing Costs, Mortgage FAQs, Top 10 Mortgage FAQs, Picking a mortgage loan, fixed rate or adjustable, Loan Estimate, what to ask a mortgage broker, Buying a Home

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