Refinancing or getting a new loan plays a big role in the value of your assets. It is a good idea to learn as much as possible about your broker and understand what they require from you for the process of your loan to run as seamless as possible.
The following are 10 questions to ask your broker to help make everything clear on your options and requirements.
1. What mortgage types do you offer?
Mortgage brokers offer an array of loan types. Such loans differ in the principal value offered, interest rates, and length and payment type. The following are common mortgage types.
- Conventional Loan
- Federal Housing Authority (FHA)
- Fixed-rate Mortgages
- Adjustable-Rate Mortgage
- Reverse Mortgage
- Jumbo Loans
2. Why should I use a mortgage broker rather than going straight to the bank?
Mortgage brokers do not lend, they work with lenders (banks) and connect you to the best lender that offers the best interest rate. Working directly with lenders limits you to the rates they offer. Brokers partner up with 100s of lenders so they have access to a huge array of interest rates giving you better choices when picking the best interest rates for your needs. Once your loan application has been created brokers lock rates for you and walk you through the payment process to educate you to make better final decisions.
3. Which mortgage is the best fit for me?
Once you’ve completed an application and provided the broker with all the requirements, employment, income, assets statement, credit, debt, expenses, down payments and other finances, he/she will go over all your information and decide accordingly.
4. What are the full costs of my mortgage?
All your costs will be available to you via the Good Faith Estimate. The GFE shows you a line-by-line estimate of mortgage costs. When your loan is ready, a final document called the HUD-1 settlement statement will be sent to you.
5. What documents do I have to provide?
Proof of income and assets, ID, SS, and a credit history are the main documents. Depending on the scenario of your loan, it can be a lot of paperwork, so it is important to know where all your documents are so you can quickly provide your broker with the requirements.
6. What are the guidelines to qualify for the loan?
Lenders require the borrower to meet a set of guidelines in order for them to fund the loan. A simple example would be, VA loans are only available to veterans who have provide a Certificate of Eligibility (COE). Each mortgage type differs and comes with its own list of guidelines, however, your broker or loan officer will be able to let you know which ones you qualify for.
7. How long will it take to process my loan application?
It mainly depends on the type of loan, the complexity of the scenario of the loan, and how busy the lender might be. The process usually takes from as little as two weeks to as long as 60+ days. The broker is the point of contact between the borrower and the lender so working closely with the broker and providing all the required documents on time can make a big difference in the closing time-span.
8. When can I lock the interest rate, and what will the cost be?
Interest rates are constantly fluctuating. Between the period you apply for your mortgage and the closing you will be seeing a lot of different numbers. To avoid losing lower rates you can lock the rate for a fixed period of time (10/30/45/60/90 days), the longer the period and the lower the interest rate the higher the fees will be. You should consult with your broker about when to lock a particular rate to avoid unnecessary expenses.
9. How many points does that rate include?
A point is a fee paid to the lender for a reduced interest rate. 1 point is equivalent to 1% of your total loan amount. It is important for you to understand how many points are included in your rate and the benefits to buying lower rates. Many people settle for higher rates to avoid the extra fees that come with the lower interest rates.
10. How much money do I need to put down?
It’s usually best to put down 20% to get the best rate and terms for the loan. Lower down payments (below 20%) usually increase the chances of adding a monthly PMI (Private Mortgage Insurance). Ask your broker about the minimum down payment required for your loan, and decide what’s best for you.