If one thing is for certain when buying a home, you’re most likely going to need a loan, and making sure you get the best loan possible should be a top priority! To help make sure you’re making an informed decision and choosing the right loan for you, here are some questions you should ask your mortgage lender:
How do I qualify for a loan?
Many factors are into play, such as your credit score, financial history, and how much savings you have. A lender will also look into your debt-to-income ratio before deciding. It’s best that you get pre-approved so you know if you qualify.
What are the requirements for loan application?
Aside from proof of your identity, you will need to prepare a lot of paperwork related to your finance, such as proof of income, credit card debts, and the like.
What are my options?
There are many options for you when looking for home loans—the lender will lay them out for you. While loans with low-interest rates are appealing, keep in mind to compare the different loan features, aside from the interest rate.
Does the mortgage have a fixed or adjustable rate?
A fixed-rate mortgage has an interest that doesn’t change throughout the whole time of the loan, while the adjustable-rate mortgage is fixed for a short interval then changes regularly. While both have their pros and cons, make sure that the rate you choose fits your needs and circumstances.
How much will the monthly mortgage payment be?
This will depend on the amount you’ll be able to pay each month. The mortgage payment will comprise a portion of the cost of the house, interest, insurance, taxes, and other fees.
Make sure that you can afford to pay for the mortgage and other expenses of owning a home.
How much is the interest?
The interest you will pay will be determined by the interest rate, and this percentage is determined by numerous factors.
How much is the minimum down payment?
The standard amount is 20 percent of the property’s sale price. However, this can go lower with other types of mortgages.
Do I have to pay mortgage insurance?
You will need to pay for private mortgage insurance if you have a downpayment of less than 20 percent.
What fees should I expect?
The one thing you’ll never avoid—fees. This might differ from one lender to another, but one thing’s for sure: you should ask them about upfront and ongoing fees related to the loans.
What is the repayment schedule?
Usually, lenders have a monthly repayment schedule. However, it won’t hurt to negotiate and double check terms for a repayment schedule that suits your situation. Make sure to check their repayment policies work for you. If not, look for a lender that does.
Can I pay my home loan early?
It might seem a silly question, because can one actually pay off a mortgage early? But you’ll never know! You might win the lottery or receive a huge inheritance that could pay off your mortgage, so make sure to ask about “early repayment adjustment”.
What if I want to switch lenders before I finish paying off my loan?
If ever you want to do that, expect to have a hard time and expensive fees. Ask your lender about how to work out switching if ever it happens.
Do first home buyers get discounts or specials?
Lenders might give first home buyers special treatment—they can get discounts on application fees or other loan features.
Will I receive any assistance from the government?
First home buyers can receive generous grants and concessions from the government, such as the first homeowner’s grant or stamp duty concessions. However, the amount will depend on a few factors such as your eligibility.