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Saturday, April 20, 2013

Mortgage questions to ask a lender

Amortization of mortgages typically charge higher interest up front
Mortgage application requirements differ by the kind of mortgage

The entire mortgage process is often overwhelming for many people, especially for those who have never been through it before. The possibility of so many different situations makes it necessary to highlight the most important mortgage questions to ask a lender. 

What different types of mortgage programs do you offer? 

Not all lenders are the same or carry the same loan products and programs. Some loan types, such as FHA, are only available through an FHA approved lender. Further, some lenders may only offer certain FHA loan products. Not all lenders offer VA loans which are available for military and their families. Finding out what a lender offers at the very beginning of the loan process will help determine if this is the right lender for you. 

What type of mortgage best suits your needs? 

It is so important to have a knowledgeable lender who is able to fit you into the most appropriate loan product. While a borrower may know what they want, a lender should be able to show what is available, as well as, the mortgage product that is cost effective and affordable for the borrower. Some borrowers may be limited to the mortgage program that will fit their requirements, but others may have options available to them which the lender should be able to offer. 

 What documents should be submitted? 

After discussion with a lender, the lender should be able to give the borrower a list of what documents will be required to be submitted. The list should be as detailed as possible. In some cases, after examining the loan file, it is often necessary to submit additional documents to finish processing the loan. Standard documentation is required for employment, income and assets, but a lender should know if items, such as tax returns, are required. 

What is necessary to qualify for a particular mortgage product? 

A lender should be able to tell a borrower the qualifications for a certain mortgage since each loan program has guidelines and requirements. The borrower should not be guided to a mortgage that they will not be able to meet approval requirements. The lender should be able to know from the discussion with the borrower what the individual's debt to income ratios are, what the loan limits are for the specific location, what the required down payment is, etc. 

 What is the total cost of the mortgage? 

A lender must provide a borrower with a GFE within three days after an application have been submitted. The GFE will show an estimate of the total costs of the mortgage. This gives the borrower the opportunity to compare different types of loans or offers from multiple lenders. 

How long it will take to process the mortgage? 

The lender should have a general idea of the processing and underwriting time schedule for the loan provided that unexpected issues do not come up which would delay the loan from moving forward. It is not unusual for things to happen or for the lender to be backed up with processing, especially when mortgage rates are low and mortgage volume is high. The mortgage process can be stressful, but with the help and guidance of an informed lender, it can also move smoothly. Nevertheless, the entire process does require patience on the part of both the borrower and the lender. 

About the author: Rosemary has been writing for FreeRateUpdate.com since 2010 , a company that matches consumers with banks and lenders offering low mortgage rates. Previous to her writing career, Rosemary spent 13 years working hands-on in the mortgage industry as a mortgage loan analyst, mortgage processor, property manager, and a mortgage underwriter.

Image credit: Denelson83; GFDL, CC BY-SA 3.0