When you’re on the path to securing a mortgage for your dream home, it’s not just about understanding your financial situation; it’s also about getting the best deal available. To make sure you’re well-informed and can confidently navigate the mortgage process, here are five essential questions to ask your lending institution:
1. What Are the Current Mortgage Rates?
Start by asking your lender for a list of their current mortgage rates. It’s crucial to know the prevailing rates in the market. However, don’t stop there; inquire whether the rate quoted is the lowest available for the day or week. Lenders may offer different rates depending on various factors.
2. Is My Loan Rate Adjustable, and How Will It Change?
If your loan comes with an adjustable interest rate, it’s essential to understand how and when your monthly payment will fluctuate. Knowing the schedule and the factors influencing these changes will help you plan your budget accordingly.
3. What’s the Annual Percentage Rate (APR)?
The Annual Percentage Rate (APR) is a comprehensive measure of the total cost of a loan, including not just the interest rate but also other fees like points, broker fees, and credit charges. By asking about the APR, you’ll gain a clear picture of the overall cost of your mortgage.
4. Can You Quote the Points in Dollars?
Points are upfront fees paid to lower your mortgage interest rate. Instead of just hearing the number of points, request your lender to express it in dollar terms. This way, you’ll grasp the real financial impact of paying points.
5. Can I Lock-In the Quoted Rate?
If you’re satisfied with a proposed interest rate, inquire about the possibility of locking in that rate. Rate locks can protect you from market fluctuations. Keep in mind that there might be a fee associated with this service, and lock-in agreements typically last for a specified period, usually between 60 to 90 days.
By asking these five questions, you’ll gain a deeper understanding of your mortgage terms, ensuring you’re not only getting a competitive rate but also making informed decisions about your financial future. This knowledge empowers you to confidently move forward in your journey to homeownership.
Are you looking to get pre-approved for a mortgage?
Are you deciding between selling your home and getting a loan on the meantime to buy another home?
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