When you sit down with a lender, please be sure to get answers to these 10 questions before you go any further in the loan process.

1.  What is the interest rate on this mortgage?
Be sure to ask for the annual percentage rate (APR) of the loan’s interest. The APR is usually higher than the originally quoted rate because of the additional fees involved in procuring a loan. You must beware of APR found in advertisements. Often these are used in bait and switch schemes to get customers in the door. Always ask for an itemized list of rates, points and fees.

2.  What discount and origination points will I be charged?
Often lenders may charge prepaid mortgage interest points. Find out the kind of points they will be and their effect on your loan.

3.  Will you give me a Closing Costs Worksheet or Loan Summary up front?
There are fees that are a part of every loan. These fees pay for the services provided by the lender and the other companies involved in the loan process.  Experts advise to be wary of any lender that refuses to supply the closing costs upfront.

4.  What are the fees, if any, involved in locking in an interest rate?
Interest rates are constantly fluctuating and it is possible that it could change between the time you apply for a loan and the time you close. Often you can “lock in a rate” that will keep your interest rate the same from the day you apply. Please make sure that you find out if there are any fees involved with this.

5.  What is the minimum down payment of this loan?
A typical down payment is between 3% and 20% of the loan amount. The more money you can put down, the better your chances are of being able to lower your rate and improve your loan terms. If you are unable to make a down payment of 20% of the loan amount, you will be required to pay private mortgage insurance (PMI).  Even with PMI, there are options available where your seller can pay the upfront mortgage insurance premium so that you will NOT have monthly mortgage insurance payment.

6.  Is there a prepayment penalty on this loan?
PPP do not exist these days, but it’s good to ask.  Prepayment penalties may be added to lower the loan’s interest rate. There are many types of prepayment penalties that can be added to a loan.

7.  What documents will I need to have?
Generally, you will need the following information in order to have your loan approved.

Documentation for all loans

  • Pay stubs for the most recent 30 days
  • Information on any other income you wish to have considered, such as part-time income, rental income.
  • W-2’s and tax returns (all pages and schedules) for the past two years
  • Name, address and phone number of landlord for the past 24 months, if renting
  • Previous two months bank statements, all pages, i.e. checking, savings, CD, brokerage accounts, mutual funds, etc.
  • Most recent statements on asset bearing accounts if generated yearly or quarterly (401K, IRA, etc.)
  • Copy of social security card

8.  What qualifying guidelines are included with this loan?
These requirements relate to your income, employment, assets, liabilities and credit history. First-time home buyer programs, FHA and VA loans and other government-sponsored mortgage programs typically offer easier qualifying guidelines than conventional loans.

9.  How long does it take to process a loan?
It can take as little as two weeks, to as long as 60 days or more. Be sure to have the lender give you the most accurate timetable possible so you can determine how far out you need to lock your interest rate.

10.  What might delay approval of my loan?
If you provide complete and accurate information to the lender, the process usually runs smoothly. Be sure to tell your lender immediately of any changes to your income or any new debt or marital status while your loan is processing. There could be delays if the underwriter discovers any undisclosed credit problems so be sure to be as accurate as you can.


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