The Smart Way to Choose a Mortgage

Here are some serious questions to ask yourself and your loan officer BEFORE you sign your loan application:

1) What type of loan is this? Fixed, adjustable, balloon, etc.

2) What is the contract interest rate?

3) What is the annual percentage rate (APR)?

4) How long is the repayment term? 30, 40, 20, 15 years?

5) How much down payment is required?

6) Are there funds available to help you with your down payment should you need assistance?

7) Will you be required to escrow your taxes and insurance, or do you have a choice to pay those yourself?

8) What is the amount per month that you’ll pay towards your escrow (if you’ll be escrowing)?

9) Will your loan have private mortgage insurance? If so, when and how can you get that removed?

10) What are the estimated lender’s fees for this loan, including origination fees/points, broker fees, funding fees, application fees, etc?

11) What is your total estimated monthly payment (with principal, interest, taxes and insurance)? Does it fit comfortably within your budget?

12) What is your total debt to income ratio?

13) Is there a prepayment penalty on this loan? If so, for how long, and what is the penalty if you pay off the loan early?

14) Do you get something in writing when you lock in the rate for your loan? Is there a penalty if rates go down and you wish to switch to a lower interest rate after you’ve locked?

15) When does the loan get locked (at application, at loan approval, or at another point in the process)?

16) How long before the lock on the rate expires?

17) Will you get a copy of the Good Faith Estimate (GFE) at application?

18) Will the lender provide you with a written loan commitment? If so, when?

19) How much will your appraisal cost?

20) How much will attorney fees, recording fees, title company fees, etc. cost?

21) What inspections are required, and who pays for those (buyer or seller/borrower)?

22) Are you able to buy your interest rate down? Should you?

23) Will you need flood insurance, a survey, or private home inspection?

24) Are any of the costs negotiable or able to be waived?

25) Did you get a second opinion or quote for this mortgage loan? If so, how does it compare?