Think of a mortgage advisor as your personal mortgage expert. They act on behalf of lenders to advise you through the application and closing process. Your mortgage advisor – also called a broker or loan officer – is a partner you can turn to for your mortgage questions.
Use these ten questions as a guide for when you first meet with your mortgage advisor.
1. What types of loans do you offer?
Most everyone offers fixed-rate and adjustable-rate mortgages, but the term, rates, or special financing options may be limited depending on where you’re shopping. It’s best to ask this question first to see the range of options offered.
Tip: One of the many advantages of working with a mortgage advisor like Solidify is we utilize a network of over 60 lenders to find the best rate and loan for your financial situation.
2. What type of loan is best for me?
Mortgages aren’t one size fits all. Your mortgage advisor should guide you through your options and highlight the pros and cons of each choice. Ultimately, they can help you decide the best loan for your situation.
Tip: Anyone trying to convince you to take the first rate you’re offered without knowing your financial profile doesn’t have your best interests in mind.
3. How much down payment do I need?
Ask your mortgage broker about different down payment options. The standard advice about saving 20% for your down payment might not actually be best for you depending on the type of home you’re buying, your financial situation, and current rates.
If you decide to put less than 20% down, ask your mortgage advisor about private mortgage insurance and any special promotions that would allow you to contribute to your home’s equity faster.
Tip: Your mortgage advisor or broker should be an expert about your region’s down payment assistance programs, so be sure to ask their help about any programs that may apply to your situation.
4. What is my loan estimate?
A loan estimate breaks down all the costs associated with the loan as well as any closing costs and an estimate of the cash needed at closing. Lenders are legally required to give this to you within three business days of your loan application. Turn to your mortgage advisor with questions about anything that doesn’t make sense.
Tip: Three business days prior to closing, you’ll also receive a closing disclosure, with all the mortgage costs and third-party fees.
5. What is my interest rate and annual percentage rate?
When you receive your quote, understand that the interest rate will determine your monthly payment amount. The annual percentage rate (APR) is the interest rate plus loan fees.
A broker will provide you multiple rate quotes from various lenders, giving you more options on your loan choice. Keep in mind that if you choose to work with a bank’s loan officer, your rate and product choices are much more limited.
If you’re thinking about getting an adjustable-rate mortgage, ask how often the rate could be adjusted and the most it could increase.
Tip: While asking about potential rates, understand what your monthly home payment will be as well as the APR so you understand all the embedded fees in the mortgage.
6. Do you offer rate locks?
A rate lock guarantees your rate will stay the same from signing to closing. To preserve a low rate, ask your mortgage advisor if they offer interest rate locks. If they do, ask how much it costs (if anything), how long it lasts, and if they offer extensions after expiry. Also, check that you can get the rate lock in writing.
Tip: If you decide to get a rate lock, move quickly during the process. Otherwise, you may face costly lock extension fees.
7. Is there a prepayment penalty?
Some lenders disincentivize borrowers paying their loans off early. Ask your mortgage advisor to walk you through the terms of the loan and understand if there are any prepayment penalties for paying the loan early or refinancing.
Tip: Prepayment penalties may be fixed sums or calculated based on the percentage of the loan’s principal or remaining interest.
8. What costs will I pay at closing?
Your mortgage advisor can provide the specific dollar amounts of your closing costs. The typical closing costs for a home loan may include:
– Attorney fees
– Title service fees
– Document stamps
– Document taxes
– Survey fees
– Brokerage commission fees
– Mortgage application points
– Appraisal fees
– Inspection fees
– Warranty fees, and more
– Home inspection
– Homeowners insurance
– Prepaid interest
– Prorated taxes
– For those who opt for impounds or escrows: a prepayment of some taxes and insurance
Tip: Ask about lender credit. At Solidify, 99% of our loans are low or no cost by using a lender credit to cover the closing fees and costs. To save on your loan costs, contact a Solidify Mortgage advisor today.
9. When will my loan close?
To plan for your move, ask your mortgage advisor for the loan’s target closing date and move-in dates. Also ask if they provide any kind of guarantee of on-time closing, so that if the closing gets pushed back, you’ll be compensated.
Tip: Make sure your closing date is convenient for you, your advisor/broker, and the seller.
10. What should I do while I wait for my loan to close?
Any behavior that could majorly impact your credit score should be avoided while you wait for your loan paperwork to be approved. If there’s any credit-related activity you’re considering, like opening a new credit card or purchasing furniture on credit, ask your mortgage advisor for their thoughts before you act.
Tip: Avoid switching jobs or income streams during your loan approval process, as it could create changes for your approved loan size.
A Final Tip
Your mortgage advisor should be a person you trust and feel comfortable turning to for your questions. If you’re looking to get started with your home financing, give us a call and we will help.
