Top 8 Things To Ask Your Lender During The Application Process

Knowing what questions to ask your lender during or before the loan application process is essential for making your mortgage approval process as smooth as possible.

Many borrowers fail to ask the right questions during the mortgage pre-qualification process and end up getting frustrated or hurt because their expectations were not met.

Here are the top eight questions and explanations to make sure you are fully prepared when taking your next mortgage loan application:

1. What documents will I need to have on hand in order to receive a full mortgage approval?

An experienced mortgage professional will be able to uncover any potential underwriting challenges up-front by simply asking the right questions during the initial application and interview process.

Residence history, marital status, credit obligations, down payment seasoning, income and employment verifications are a few examples of topics that can lead to stacks of documentation required by an underwriter for a full approval.

There is nothing worse than getting close to funding on a new home just to find out that your lender needs to verify something you weren’t prepared for.

2. How long will the whole process take?

Between processing, underwriting, title search, appraisal and other verification processes, there are obviously many factors to consider in the overall time line, which is why communication is essential.

As long as all of the documents and questions are addressed ahead of time, your loan officer should be able to give you a fair estimate of the total amount of time it will take to close on your mortgage.

The main reason this question is important to ask up-front is because it will help you determine whether or not the loan officer is more interested in telling you what you want to hear vs setting realistic expectations.

You should also inquire about anything specific that the loan officer thinks may hold up your file from closing on time.

3. Are my taxes and insurance included in the payment?

This answer to this question affects how much your total monthly payment will be and the total amount you’ll have to bring to closing.

If you include your taxes and insurance in your payment, you will have a higher monthly payment to the lender but then you also won’t have to worry about coming up with large sums of cash to pay the taxes when they are due.

4. Will my payment increase at any point after closing?

Most borrowers today choose fixed interest rate loans, which basically means the loan payment will never increase over the life of the loan.

However, if your taxes and insurance are included in your payment, you should anticipate that your total payment will change over time due to changes in your homeowner’s insurance premiums and property taxes.

5. How do I lock in my interest rate?

It’s good to know what the terms are and what the process is of locking in your interest rate.

Establishing whether or not you have the final word on locking in a specific interest rate at any given moment of time will alleviate the chance of someone else making the wrong decision on your behalf.

Most loan officers pay close attention to market conditions for their clients, but this should be clearly understood and agreed upon at the beginning of the relationship, especially since rates tend to move several times a day.

6. How long will my rate be locked?

Mortgage rates are typically priced with a 30 day lock, but you may choose to hold off temporarily if you’re purchasing a foreclosure or short sale.

The way the lock term affects your pricing is as follows: The shorter the lock period, the lower the interest rate, and the longer the lock period the higher the interest rate.

7. How does credit score affect my interest rate?

This is an important question to get specific answers on, especially if there have been any recent changes to your credit scenario.

There are a few key factors that can influence a slight fluctuation in your credit score, so be sure to fill your loan officer in on anything you can think of that may have been tied to your credit.

8. How much will I need for closing?

*The 2010 Good Faith Estimate will essentially only reflect what the maximum fees are, but will not tell you how much you need to bring to closing.

Ask your Loan Officer to estimate how much money you should budget for so that you are prepared at the time of closing.

Your earnest money deposit, appraisal fees and seller contributions may factor into this final number as well, so it helps to have a clear picture to avoid any last-minute panic attacks.

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Now that you have the background to these eight important questions, you should feel more confident about finding a mortgage company that can serve your personal needs and unique scenario.

Remember, the more you understand about the entire loan process, the better your experience will be.

Most frustration that is experienced during the home buying and approval process is largely due to unclear expectations.

You can never ask too many questions…

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March 22, 2010 by · Leave a Comment

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About Lester

In 1973, I graduated high school and started college. In 1977, I met and married my wife Deborah of 40 years, put on a suit and tie, and went to work for Prudential Insurance Company. In 1979, my wife was offered a great job as an advertising executive for a San Jose television station, so we moved from the Monterey Bay area to San Jose, CA. I needed a new job in San Jose and I didn’t really want to start from scratch with a new insurance office. While going to college, I had managed a Travelodge, and it was that management experience that landed my new job and started my career in real estate as a property manager. In 1980, I completed my first certification course with the National Apartment Management Accreditation Board (NAA), and in 1983, I earned my Certified Apartment Manager (CAM) designation which I keep current today. In 1984, my daughter Pearl was born, and in 1987, my son Max was born. When I was managing rental properties, many of my tenants wanted to become homeowners, so in 1988, I got my real estate sales license with the California Department of Real Estate to help them with that goal. As a new Realtor, I found that obtaining financing is the first and most important step to shopping for a home, so in 1989, I completed my first of many programs in real estate finance and loan officer training. In 2000, I stopped doing property management and real estate sales altogether, to concentrate on mortgage loan origination exclusively with Coast Capital Mortgage. In 2004, I moved from Coast Capital Mortgage to join First Priority Financial. In 2014, First Priority Financial changed its business model from mortgage brokerage and banking to just mortgage banking. To better serve my clients and stay a competitive mortgage broker, I joined C2 Financial Corporation. How many people can truly say that they love the company that they work for? I can! ◾C2 Financial Corporation is a mortgage brokerage and a banker. ◾They are A rated and accredited by the Better Business Bureau. ◾Members of National Association of Mortgage Brokers ◾FHA and VA approved. ◾Managed by principals with over 62 years experience in the mortgage industry. ◾Partners with the largest banks in the U.S. ◾One of Scotsman’s Guide Top Mortgage Originators of 2012 and 2013. I’m a lucky guy that loves my job and the people that I work with. Every day borrowers entrust me with one of the most important financial decisions of their life and I don’t take that responsibility lightly. I do what is best for my clients and know that by doing so I’m not only doing what is morally and ethically right, this belief system will result in my borrowers referring me additional clients, which is the best long-term business model. So far so good!

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