It is important to know the estimated cost of doing business upon completion of your mortgage. No doubt that borrowing money today is a bit more difficult due to the increased guidelines lenders must adhere to, but when you get approved for a mortgage there is no better time than now to borrow money due to low mortgage rates.
Below are some questions to ask your lender but be prepared with questions of your own. The right lender to choose will have great programs to offer but most importantly will take the time to listen and address all of your questions.
It is also important to know that different loan programs have different fees as well as the lender you choose. Here are some good questions to ask when approaching a lender about mortgage programs:
- Do you charge application fees, and if so, what happens with them?
- Application fees are gathered mostly because of the increased amount of costs the lender faces to maintain and complete a compliant loan file. Ocean Communities collects a $375 application fee for Single Family Residences, however this fee is credited towards closing costs as long as your loan closes with us.
- How do you get compensated to do loans and will it be included in my costs to do business with you?
- Mostly referring to commissioned based lenders such as Mortgage Brokers, they generally get paid by delivering loans to larger Banks by charging additional fees or receiving compensation directly from the end Bank. This is also known as Yield Spread Premiums. Yield Spread Premiums are not part of your loan, nor do borrowers pay this fee, it comes directly from the end Bank.
- What risks do I face moving forward with my loan?
- Simply put, issues can and do happen. If appraisals for properties come in low it could prompt changes to the loan meaning a possible additional down payment, change of loan program, additional fees, etc. It is important to know the risks you could face. If you are already preapproved, generally the issues that you run into are with the home you are buying. Be proactive and get a home inspection done of the property prior to your contractual commitment of a Purchase and Sale Agreement.
- Do I pay for the fees out my own pocket or can they be included in the loan?
- When buying a home very seldom do you have the ability to finance the closing costs. A good negotiating tip would be to request the seller pay for some or even all of the closing costs, but keep in mind if the seller receives multiple offers on their property and you request costs to be paid and someone else doesn’t, well, who would you choose?
I hope you find this information helpful. Happy Holidays!
