Important questions you should be asking your mortgage lender
Here in Visalia, Tulare, Porterville, Hanford , and Fresno shopping for a mortgage to buy your new home in 2023 can be a stressful and time-consuming task. This is especially true when you are just learning about the mortgage industry and how it works to help you get the home of your dreams.
With that in mind, here are a list of questions you should be asking your mortgage lender before you sign anything.
WHAT TYPE OF LOANS DO YOU OFFER AND WHAT ARE THE QUALIFYING GUIDELINES?
Here in our valley, there are many distinct types of mortgages including: fixed-rate, adjustable rate, Federal Housing Administration (FHA), Veteran’s Administration, just to name a few. So, it is important to know which type of loan is best for you and your family.
Do not be afraid to ask your lender to take the time to explain each one to you and their pros and cons. You need to know what is best for you and why it is.
WHAT IS THE INTEREST RATE AND ANNUAL PERCENTAGE RATE(APR)?
The interest rate is going to be based on the size of your loan and on your credit score. Interest accrues over the life of your loan and over a 15-30-year span and can add up considerably. If the interest rate is adjustable, ask how long the loan rate will remain fixed, and about the maximum annual adjustment, highest rate cap and margin.
WHAT’S THE MONTHLY PAYMENT GOING TO BE?
As you are trying to develop a budget after your home purchase, you are going to need to know what your monthly expenses are going to look like.
Make sure you include taxes and insurance in your calculations. Remember that your monthly payment should not be so large that you cannot also budget for unexpected expenses and a retirement fund.
HOW LARGE OF A DOWNPAYMENT DO YOU NEED?
This is important. Interest rates and therefore monthly payments vary depending on the size of your down payment. This also factors into whether you will be required to pay mortgage insurance.
Usually, companies will waive PMI (Private Mortgage Insurance) if your down payment is 20% or more of the purchase price. Some loans, like FHA, VA and USDA will allow for a down payment of zero to 3.5 percent but depending on the program, they will also require insurance premiums for the life of the loan.
Although it is certainly possible to obtain a conventional loan with less than 20 percent down, the interest rates will certainly be higher. The good news is that, once your equity reaches 20 percent or more, you can renegotiate with your lender and see if they will waive the insurance fee.
As you can see, obtaining the right mortgage loan requires some knowledge. The right mortgage lender can help you and your family.
Jeremy Engle is the Owner/Senior Loan Officer at Vero Mortgage, a division of Country Club Mortgage, with offices in Visalia, Hanford, Reedley, Fresno, San Luis Obispo, and now in Mammoth Lakes. Jeremy can be reached at [email protected] or 559-734-5000 in the Valley or 805-5442775 at the Coast. And now available in the Eastern Sierra Nevada town of Mammoth Lakes at 760-914-4413.
This article originally appeared on Visalia Times-Delta: Important questions you should be asking your mortgage lender