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What questions should I ask my mortgage lender?

We’re not here to sell you a product. Anyone can do that. We want to help you make an informed decision and build a relationship that we hope lasts a lifetime. When you come to us asking about a mortgage, you can expect straight talk. We care about your goals, and it’s in our DNA to deliver extraordinary service to meet them.

We know you have a lot of questions about mortgage loans, especially if this is your first one. Feel free to bring the questions below with you and use them as a conversation starter. We’re here to help you any way we can, no matter where you are in your readiness to buy a home.

What information do you need from me?

This is best way to jumpstart a great conversation with us. We often ask what monthly mortgage payment you’re comfortable with and how much money you have available to put down. If you aren’t sure, it’s no problem. We can talk through your situation and get a sense of where you’re at financially. Then we can go from there and offer you our expertise to finance a home that’s right for you.

Why should I put down 20 percent?

Asking this question could save you money. When you put 20% down on your mortgage, you can avoid private mortgage insurance, or PMI. That’s money you never recover and doesn’t go toward your mortgage payment. Not every loan operates the same, though. With conventional loans, you are not stuck with PMI forever, however on Federal Housing Administration (FHA) loans, the PMI never drops off. Let our experience help you decide what’s best for your situation.

What are my options if I have less than 20 percent or no money down?

This is a great question because there are numerous grant and assistance programs for people who want to buy a home but can’t reach the 20% threshold. We can explain programs that can assist with a down payment and closing costs or offer support for specific types of buyers such as veterans or active-duty military, medical personnel, police, correctional officers, firefighters, educators, patient caregivers, new graduates, etc., or those purchasing rural properties. Our lenders can help you consider all the down-payment options related to your unique circumstance.

How much should your payment be?

You want to make sure the percentage of your take-home pay going toward your monthly mortgage payment isn’t so astronomical that it is difficult to make timely payments. Lenders often suggest the 28 percent rule: having your monthly payment at 28 percent of your take-home pay. There are exceptions based on each person’s financial circumstances, but it is usually not recommended to go above 43 percent of your income.

What are the taxes or fees on my house or condo?

We want to ensure you have the full picture of the costs you’ll be facing when buying a home. It’s often easy to forget factoring in semiannual property taxes, insurance premiums and homeowner’s association or condominium fees. Factor those into your budget as well, because those can add thousands of dollars to your payment.

Do I need flood or homeowners’ insurance?

If the home you’re buying resides in a flood zone, you are required to own flood insurance and have it included with your mortgage payment. Homeowner’s insurance is like car insurance, but for your house. You are required to have it to own a home, but the payments don’t always have to be escrowed. You can shop around for the best deal, and often you can get a discount if you bundle your auto and homeowners’ insurance together. If you’re buying a condo, the homeowners’ association may take care of the homeowners’ insurance.

What is an escrow account and why is it beneficial?

If you’re great at budgeting and you can save the money to cover property taxes and homeowners’ or flood insurance, you might not need to ask this question. But if you prefer to plan for the expense, an escrow account is a perfect solution for you. You can put aside money each month into your escrow account and we take care of the payments for you.  , and better still, our bank doesn’t charge for this service.

What are my closing costs?

You will need money to cover closing costs, unless your contract specifically states the seller is paying them. Some banks will charge application fees at this stage, but we never do. We can talk about your particular situation and help you understand what costs to expect.

Does it matter what I use for my down payment?

Yes. Your payment source affects the down-payment process, so make sure you ask. It’s simple if it’s coming straight from your checking or savings account. But for anything else, make certain you ask this question so we can expertly help you through the process. What if the down payment is a gift from a relative? Or you want to sell a vehicle to come up with the money? Or you’ve got wads of cash stashed in your mattress? Each answer takes the process a different direction, but we want to ensure it ends with you unlocking the door to the home you want.

Does it matter what type of home I want to buy?

In terms of what loan options are available to you, yes. A Veterans Affairs loan, for example, can’t be used to finance a condominium. Ask this question whether you’re seeking a single-family home, a condo or a manufactured home so we can show you the loan options for the home you desire.

Will my loan stay at your bank?

There are some types of loans that remain completely under our management. Other loans are sold and owned by government entities such as the U.S. Department of Veterans Affairs (VA), the U.S. Department of Agriculture (USDA) Rural Development or the Federal Housing Administration (FHA). No matter where your loan resides, unless it’s a VA, USDA or FHA loan, you can count on us to always service your loan directly and locally, so you’ll never have to call anyone but us when you have questions or concerns about your loan. As you progress through the loan application process, we’re happy to provide detailed information about the servicing of your loan.

How long is the purchase going to take?

Generally within 30 days, but sometimes it takes 35 to 40 days. We’ll review your situation and give you a solid estimate.

How fast do I build equity?

We can show you an amortization schedule so you see how much you’re paying in interest over the years compared to how quickly you’re paying your principal loan amount down. And we can help you decide if a shorter-term loan might be better for you so you can build equity faster. Some clients like making one extra monthly payment a year to speed up their time to full equity. We can discuss different techniques that will work for you so you can maximize the equity in your home.

Does it make more sense to get a 30- or 15-year loan?

It depends. We listen to what your long-term goals are and factor in how much home you want to buy. The benefit of the shorter mortgage term is you get a lower interest rate and you own your home that much quicker. Be sure to ask about other terms because we can offer more than just 15 or 30 years.

Is there a prepayment penalty?

At our bank, we do not have prepayment mortgage penalties. It’s just how we do business.

Here are some other questions to consider asking:

          • Is it better to have a fixed or variable interest rate?
          • Will I have a fixed monthly payment for the term of my mortgage loan?
          • When you quote me a rate, is it locked at that time, or is it locked closer to the loan closing date?
          • Are there upfront costs?
          • What is Private Mortgage Insurance and will I have it?
          • Why do you need my W-2s and tax returns?

    We’re happy to talk with you at any time. Contact us to set up an appointment or visit any of our lenders and let us take care of you.

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