Interviewing mortgage lenders is just as important as selecting the right house. Here are  few questions that you should ask when applying for a mortgage:

 

1. Can I get Pre-Approved for a Mortgage?

A lender uses many factors to decide if you qualify for a mortgage. Your credit score and financial history matter, as well as how much you currently make and how much you have stashed away. They’ll also look at how much debt you have compared to how much income you have, known as your debt-to-income ratio. A good gauge for whether or not you’ll qualify for a mortgage is getting pre-approved.

 

2. Which Type of Loan Is Best?

Reputable lenders will find out more about you before throwing out loan options. You wouldn’t expect a doctor to suggest surgery before she assessed your medical situation, would you? Choose a lender that gathers enough information from you before recommending a particular type of loan. Don’t be afraid to ask a lender to explain the pros and cons about each option.

 

3. What Is the Interest Rate and Annual Percentage Rate?

The annual percentage rate (APR) is derived by a complex calculation that includes the interest rate and all the other related lender fees divided by the loan’s term. Ask how your credit score and amount of a down payment will affect these rates.

 

4. What is the Minimum Down Payment?

The more you put down on a house, the better. But saving up for a big down payment can be tough. The standard down payment for a conventional loan is 5% of the home’s sale price. But with other types of mortgages, you may be able put down less: FHA loan 3-3.5%, VA and USDA as low as 0%.

 

5. What Are All the Costs?

All the costs of a loan include not only fees that go into the lender’s pocket but also related third-party vendor fees such as: Appraisal, Home Inspection, Credit Report, Survey,  Lender’s Title Policy, Title and Recording Fees, Insurance, Escrow, and Taxes.

 

6. Do I have to pay mortgage insurance?

If you put down less than 20%, you’ll likely be required to pay private mortgage insurance, or PMI. The fee is typically included in your monthly payment until your loan-to-value (LTV) ratio falls below 80 percent and can cost up to $100 per month for every $100,000 borrowed.

 

7. What is the monthly mortgage payment?

The number you’ll be living with on a monthly basis is, of course, your mortgage payment. The size of your loan is typically tied to how much you can afford to pay each month. Your mortgage payment will include a portion of your principal, which is the actual cost of the house, your interest due, homeowner’s insurance, property taxes, and other fees.

 

8. Do You Offer Loan Rate Locks?

Interest rates fluctuate and change daily. If you have reason to believe that interest rates are moving up, you might want to lock your loan. Lenders typically charge zero to one point to lock a loan rate and points.

 

9. How Much Time Do You Need to Fund?

Average loan processing time periods fall between 21 and 45 days. To properly write a purchase contract, you need to include a closing date, and that date should be coordinated with your lender.

 

10. Do You Guarantee On-Time Closings?

A big issue is closing your transaction on time. Your purchase contract will contain a date to close escrow, but that date is generally subject to the lender’s ability to close on time. If the lender cannot close on time, that could mean extra costs or problems for the buyer.