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Questions to ask your lenders.

June 7th, 2019 9:57 AM by Sam Kader

You should consult with one or more lenders (not all lenders are alike and here's why you
should work with your local mortgage broker).  Lenders are to educate your home financing options and to help you navigate the loan process (thus their availability when you need them is at utmost important).  

a) What type of loans do you offer?  You may qualify for either a VA, USDA, Conventional,  or FHA loan. It all depends on your circumstances such as your FICO score, down payment and subject property. 

b) What is the interest rate and Annual Percentage Rate (APR)? As a general rule - you want the difference between the rate and APR to be as little as possible - indicating minimum junk fees and closing costs. 

c) How large does my down payment need to be for each loan?  Down payment can be as little as 3% with FNMA HomePath or 0% with VA and USDA loan. 

d) What is earnest money? An earnest-money deposit is a guarantee that you the buyer will fulfill the contract. If the transaction cannot be closed because the buyers fail to fulfill their part of the contract, the sellers retain the earnest money deposit.  Earnest money deposit must be made from seasoned funds (funds already deposited in your account for at least 2 months). Cash earnest money deposit is not acceptable. 

e) What is an impound account? Please read more here

f) What is an escrow? Please read more here

g) What fees and closing costs will I have to pay? Closing costs can generally be broken down into 2 parts:  

i) Customary closing costs such as an appraisal, credit report fee, title policy, escrow and recorded fees and taxes. 
ii) Prepaid items such as property insurance, property taxes and per diem accrued interest charges.  This part is indifferent from lender to lender.  Here's more information on closing costs. Since implementation of TRID in 2015, lenders are required to deliver a Loan Estimate within 3 days of receiving your completed loan application.   

h)  Do you charge origination charges?  As your mortgage broker, our commission is being paid by our lenders. We do not charge origination charges.   

i) Do you offer loan-rate locks? Lenders generally offer from 15 to 120 days lock. As a general rule, the higher the lock days, the costlier the lock fee is. 

Not all lenders are alike - mortgage rates are a good comparison and equally important are customer service and ability to close on time. 












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