What to Ask Your Lender When Buying a House

The home buying process can be both exciting and stressful. Becoming informed and hiring the right real estate agent are two of the best ways to take the stress out of buying a house. While you certainly want to be informed on the buying process, you should also know what to ask your lender.

A big part of buying a home is taking out a mortgage. If you don't ask the right questions, you may end up with the wrong lender or loan. Here are a few of the most important questions to ask your lender when buying a house.

Which Loan Program Works Best for Me?

Every situation is different and if you don't ask this question, you may get a program your lender wants to sell you, not the right one for you. Whether you work a regular job or you work for yourself, there are likely multiple loan programs you qualify for with most lenders.

A good lender will take the time to get to know you and will figure out which mortgage is best for your situation. Make sure your lender does this or you may get stuck with a program that isn't right for you but paid the account executive a better commission.

How Much Will My Down Payment Be?

You don't need any surprises in the home buying process. Before you go any further, find out how much the lender will require you put down to get approved. Some lenders have programs offering low down payments of 5%, 3.5%, or even 0% down. However, other lenders and other programs will require 10% or even 20% down.

The down payment percentage will help to determine the price you can pay for a home. Know how much you need down and what that means for your home buying budget before shopping for your new home.

What are Discount Points and Origination Fees?

Lenders use discount points to help buy you a lower interest rate, which is important to understand. Make sure you know how many points you are paying and why.

It's also important to know what the origination fee will be as it's paid directly to the lender when you close on your home. This fee is usually 1% but can vary from lender to lender and may even be 0% in some areas. Some lenders even charge a flat fee instead of a percentage.

What Costs are Involved with a Mortgage?

You need to know all the costs you will be paying with the mortgage. You should also know which ones may be rolled into the loan and which you will need to pay as a part of the closing costs. Often, these costs will include:

  • Application fees
  • Attorney fees
  • Home Inspection Fees
  • Appraisal Fee
  • Origination Fee
  • Title Search Fee
  • Taxes
  • Insurance
  • Escrow Deposits
  • Credit Report Fee
  • Private Mortgage Insurance or PMI
  • And More

What Will I Pay Monthly on my Mortgage?

The monthly mortgage payment is important to know and you want to know what it includes, as well. Often, you will pay your home insurance and taxes as a part of your mortgage payment. Make sure you understand what your monthly payment will be and whether it's a PITI (principal, interest, taxes, and insurance) payment or just a PI (principal and interest) payment. For your convenience we have put together a Mortgage Calculator tool to help you to determine how much house you can afford and/or qualify for. 

When Will I Close on My House?

Once you're approved and everything is ready to go, make sure you ask your lender how long it will take before you close. The closing time can vary depending on the contingencies in the offer and the underwriting process for the loan. You may have to wait for a home inspection, appraisal, and other contingencies to be handled before you can close, but this all depends on the situation.

There are several things to understand when you decide to buy a home in Charlotte. You want to make sure you understand every step of the process, including the mortgage loan. Hiring a skilled real estate agent will ensure you know what's happening and the right questions to ask along the way.

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