9 Smart Questions to Ask Your Mortgage Lender

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Finding the right house is just one part of the homebuying process; finding the financing that’s right for you is just as important. Here are nine questions to ask your mortgage lender before signing on for 30 years of monthly payment

There are lots of different mortgage types out there—from fixed-rate and adjustable-rate mortgages to Federal Housing Administration (FHA) and Veterans Affairs (VA) loans. But not every lender will offer every type of mortgage. It’s smart to go with a lender that offers a wide range, so you’ll have options and not feel pressured into any one type of loan.

The answer to this will depend on several factors, including your income, credit, debt and down payment. Also, certain loans have specific requirements for qualified buyers (for example, VA loans are only for eligible veterans). Be sure and ask your lender about the guidelines for the mortgage you’re considering, so you’ll know whether you qualify.

If you’re just starting your house hunt, getting preapproved for a mortgage will kick-start your search. You’ll know exactly what you can afford, and you’ll have more negotiating power when it comes to making an offer. Find out from your lender how long the process takes and how long your preapproval will be valid. That way you’ll know how much time you can devote to house hunting before your preapproval expires.

The fees and costs that come with getting a mortgage can vary from lender to lender. If you’re talking to multiple lenders (which is a smart idea), make sure you understand the different costs. All lenders should provide you, up front, with an estimate of the total loan cost.

If you’ve already decided on a home, made an offer and applied for a mortgage, you’ll want to pay close attention to your credit until the new loan is closed. For example, if you take out a new car loan or lease while your mortgage is still being processed, that change to your credit history could affect your chances of getting the mortgage. Be sure and ask your lender about any dos and don’ts.

Even seasoned homebuyers could be in for a surprise when they try to enter today’s housing market. If you bought a home before 2008, you may have breezed through the process easily. Today, expect to be asked to provide more documentation than before. Your lender should be able to fill you in on current guidelines.

Knowing up front what to expect along the way helps smooth the process and avoid any misunderstandings later on.

Many lenders allow you to make biweekly payments, which add up to one extra payment per year and can save money on interest over the term of the loan. Another option is to have your payments automatically drafted from your bank account, so you don’t have to worry about missing a payment. Make sure the lender you choose offers the payment option that suits you best.

It’s pretty common for lenders to sell loans—and it’s important to remember that if your loan is sold, its terms cannot change. Your interest rate and payment will stay the same; the only change will be where you send your payment. But if keeping your loan with your original lender is important to you, be sure to ask this before you sign on the dotted line.

Adjustable rate loans typically have an initial rate set below the rate offered on fixed-rate home loans; however, over time, the rate rises and, if the adjustable rate home loan is held long enough, the interest rate eventually surpasses the going rate for fixed-rate home loans. Adjustable-rate loans use a margin which adjusts in predetermined intervals based on a publicly available index. Auto Club Trust, FSB uses a margin to determine the interest rate charged for loans. This margin adjusts annually based on publicly available indexes. The indexes that Auto Club Trust, FSB uses include: LIBOR, New York Prime and Treasuries. At the time we provide a loan offer to you, we will disclose the specific margin, frequency we adjust the margin, and the index used for your specific loan. Modular, manufactured homes, condominiums, co-ops, leasehold interests and trusts are not eligible. Loans offered through Auto Club Trust, FSB NMLS # 799629

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