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Mortgage Loan, Mortgage Loan Calculators,
Mortgage Loan Application
Here are 10 key questions to ask
at application time to help you find the best overall mortgage
loan
If you have already selected a lender and are ready
to apply, make sure you have the answers to these questions first.
Mortgage
Loan Calculators by Lendersnow.com
1. What is the interest rate on this mortgage?
To determine exactly what you'll pay over the term of the loan,
you need to know the rate. Rates change quickly, and if your credit
is less than perfect, you may not be offered the lender's lowest
figure.
To effectively compare different lenders' programs,
ask for the annual percentage rate (APR) of the mortgage interest,
which is generally higher than the initial quoted rate because
it includes all of the lender's fees. But beware: the APR found
in advertisements can be misleading. Mortgage lenders don't always
include all the fees they charge in the calculation that determines
APR, so customers who use that figure to shop rather than an itemized
breakdown of rates, points and fees may end up comparing apples
to oranges.
2. How many discount and origination points
will I have to pay?
Lenders may charge prepaid mortgage interest points to lower your
interest rate or other points that have no benefit to you at all.
Find out how many you'll be expected to pay and which kind of
points they will be. |
| 3. What are my closing costs, and will
you provide a good faith estimate of these costs up front?
Mortgages come with fees for various services provided by lenders
and other parties involved in the transaction. You want to know
what those fees will be as early as possible. Many lenders will
provide a written good faith estimate of closing costs within
three days of receiving a loan application. Many experts advise
against using a lender or broker who is unwilling to do so.
4. When can I lock in the interest rate and what will
it cost me to doso?
Your interest rate may fluctuate between the time you apply and
closing. To prevent it from going up, you may want to lock in
the rate, and even points, for a specified period. Ask your lender
if lock-in fees apply. Also, find out what the experts are expecting
rates to do, read Rate Trend Index.
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5. Is there a prepayment penalty on this loan?
There may be a prepayment penalty on your loan. Some penalties
are 1 percent of the loan amount, others are equal to six months'
interest, some apply only when you refinance or reduce the principal
balance by more than 20 percent, and some kick in if you sell
your home. Find out the duration of any penalty period and how
the penalty is calculated. Some lenders offer lower interest rates
to buyers who accept prepayment penalties.
6. What is the minimum down payment required for this
loan?
The rate and terms of your loan will be based on a down payment
figure, typically 5 to 20 percent of the purchase price. If you
can put more money down, you may be able to lower your rate and
improve your terms; if you come up short, you may be required
to purchase private mortgage insurance (PMI).
7. What are the qualifying guidelines for this loan?
These requirements relate to your income, employment, assets,
liabilities and credit history. First-time home buyer programs,
VA loans and other government-sponsored mortgage programs typically
offer easier qualifying guidelines than conventional loans. |
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8. What documents will I have to provide?
Most lenders will require proof of income and assets before approving
your loan, and may require other documents as well. Buyers with
excellent credit may qualify for a no-documentation or "no-doc"
loan, but they can expect to pay a hefty down payment and higher
interest rate.
9. How long will it take to process my loan application?
The answer will depend on a number of variables. When the loan
business is brisk, underwriters get backed up, verification takes
longer, appraisals move slower and other bottlenecks develop along
the loan pipeline. Lenders may say two weeks, but 45-60 days is
probably more realistic in most cases. You'll need their best
guess to determine how long to lock in your loan.
10. What might delay approval of my loan?
If you provide the lender with complete, accurate information,
the loan process should run smoothly. If the underwriter discovers
credit problems, however, there could be delays. Make sure you
notify your lender if you change jobs, increase or decrease your
salary, incur additional debt or change marital status between
the time you submit an application and the time the loan is funded.
Put these 10 questions to your leading candidates and compare
their answers. The results should lead you toward the mortgage
lender that is right for you. |
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