Essential Questions To Ask Your Loan Officer When Applying for a Mortgage

1. What's the mortgage loan's Interest Rate and Annual Percentage Rate?
Find out what the interest rate will be on the loan as well as the annual percentage rate (APR). The APR is a combination of the interest rate, points and other charges divided by the loan’s term to give an annualized rate. It is the best way to properly compare loan costs.

2. How Many Points Will Be Charged?
A point is one percent of the loan amount. Points charged are additional to the interest rate that is charged on the loan. A loan with a low interest rate and high points may cost you thousands more than one with a higher interest rate but low points. This is important because the number of points charged varies from lender to lender.

3. What will be the Total Closing Cost Fees Charged?
Lenders charge fees for the services incurred to process and close your mortgage. By law, closing costs must be disclosed within 3 days of the loan application, however, there are different approaches to calculating them. Some brokers will initially disclose closing cost figures which are very appealing, only to provide much higher costs as your closing date approaches.

4. Is There an Additional Charge to Lock-In an Interest Rate and Discount Points?
Many lenders offer a lock policy that guarantees you a certain interest rate and points for a specified number of days (typically 15-day, 30-day, 45-day and sometimes 60-day). The alternative to this is accepting the prevailing rate and points on your closing day. Since rates can change daily, the one time lock fee may be able to save you thousands in interest over the life of your mortgage.

5. How Long Does it Take to Process My Mortgage Application?
Processing is the means by which your loan is prepared for underwriting, and eventually, approval. The time it takes to process a loan varies by the type of loan and even among lenders. Loans can usually be funded within 7 to 10 working days after the file is completed with home appraisal and other requirements. If time is of the essence, a lender with quick processing, underwriting and funding capabilities can prove to be a very valuable asset.  Most lenders will need a 30-day period to obtain the full package for underwriting and close the loan.

6. What is Private Mortgage Insurance (PMI) and can I finance any of it?
If your down payment is less than twenty percent of the sale price, to qualify, you will be charged PMI, an insurance premium to protect the lender in case you or someone else who assumes your loan defaults on the loan. Some lenders allow you to include the first years premium into the amount of the loan. Including this premium may be the difference when getting a mortgage by reducing your cash outlay.

7. Is There a Pre-Payment Penalty?
Normally you can prepay a loan without penalty if you notify the lender in writing that you are either selling or refinancing. There are however, exceptions. Make sure to ask about your mortgage, and have it configured for your unique situation.

8. What is the Lender’s Track Record?
It’s important to rate your lenders reputation for speedy processing, knowledgeable loan service and meeting contract deadlines. You want to hire a mortgage broker who will treat you the way you want to be treated and has respect for your purchase. Your lender will be dealing with your hard earned money and home purchase, so you want to be confident that you have made the correct decisions.

If you are interested in more information about obtaining a mortgage in the Jacksonville or Ponte Vedra Beach area, please contact us and we will be happy to provide you with a rate quote and pre-qualify you for your loan at no cost.