Moving onto the next step in life and deciding to take out a mortgage can be one of the most exciting and overwhelming moments in anyone’s life. These large loans are a massive commitment that you’re making and can play a massive role in the future decisions you’re able to make. Because of this, being sure that you’re working with the right lender will be incredibly important.
Unfortunately, few first time mortgage seekers really understand exactly what they need to be asking to feel confident that they’ve made the right choice. Here are the top four questions you need to ask your potential mortgage broker long before you sign any agreement.
- What Type of Loan Is Best for Me?
Many lenders like CMS Mortgages offer a wide range of different loan options for their clients including fixed rate loans, adjustable rate loans, interest only loans, and negative amortization loans, all of which come with their own benefits and disadvantages. When you apply for a loan, you’ll need to provide an in depth financial record, so your lender should be able to analyze this information and come up with a solution that fits your situation the best. Make sure your broker explains all the possible options to you so that you can feel confident you’re starting an agreement that makes sense for your current financial situation.
- Is There a Prepayment Penalty?
While this is now much less of a common problem for homeowners, there are some lenders who will add on a prepayment penalty, usually consisting of a few months of unearned interest, should you be able to pay off the loan early either through the sale of your house or refinancing. Make sure you ask your mortgage broker about this kind of penalty and whether or not it’s something they include in their contracts. If it is, just know that there are many other options out there that you could take advantage of instead.
- How Long Will Funding Take?
If you’re planning on purchasing a home, you’ll need to include a closing date in your purchasing contract. This means that you’ll need to be sure you’ll have the funds in your account before that date, otherwise you could end up having to pay significant legal fees or you could even lose out on the house. Generally speaking, mortgage loans are processed within 21 to 45 days, and so you shouldn’t have a problem getting the money you need in time. Just make sure you speak with your broker about this timeframe ahead of time, especially if you have a seller who’s looking to make a fast deal.
- What Do the Costs Include?
When you agree to take out a mortgage loan, you won’t only actually be paying for the money you needed to put down on the home. Often, mortgage costs include appraisals, a credit report, pest inspection reports, taxes, and other fees. Knowing what it is you’re actually paying for can make a big difference in terms of value, so make sure you find out exactly what’s included in the overall cost so that you can feel confident going ahead with the agreement.
