Mortgage Questions to Ask Your Lender
By
Gerald Meyer
Buying
and financing a home today can be overwhelming. Here
are some questions to ask your lender so that you can
make informed decisions.
Are
both fixed-rate and adjustable mortgage loans available?
What is the interest rate?
How
long can I "lock-in" the financing at the
current interest rate?
Is
a float down lock available in case rates drop after
I have locked in?
What
are the other fees a lender may charge me in conjunction
with my loan?
Are
funds for a second mortgage available?
On
adjustable loans:
How
often will the interest rate be adjusted?
Is there a maximum limit on each rate change?
How often will the monthly payment be adjusted?
Is there a ceiling on payment adjustments?
Can the term of the loan be extended?
What is the maximum rate that can be charged over the
life of the loan?
Is there any potential for negative amortization?
Is there a pre-payment penalty clause?
This
involves extra charges for paying off the loan before
maturity. About 80% of all loans in the United States
are paid off early.
What
is the "grace" period? How late can a monthly
payment be made before a late charge is assessed?
What will happen if a payment is missed?
If you sell your house, will the new buyer (if he/she
qualifies) be able to assume your mortgage at the same
interest rate?
Do you have to pay "points" to get your new
mortgage? Usually lenders charge points for the cost
of giving you a mortgage loan. A "point" is
1% of the loan.
Will the lender require mortgage insurance?
Is the loan serviced locally or is the servicing sold?
Ask for a written "good faith deposit".
|