5 Questions to Ask Potential Mortgage Lenders

“Who will loan me enough money to buy a home?”

These are questions worth asking prospective lenders. Generally, lenders will tell you that mortgages are based on a number of factors, one of which is your credit report. The lowest credit score allowable by any mortgage lender, including FHA lenders, is 620. You cannot have a lot of collections on your report. Ask your prospective lenders about other factors.

“Do you have any contingencies that need to be met?”

Before putting in an offer, you need to list any contingencies, such as repairing wiring or fixing the roof before closing the loan. Most lenders will require that a home is structurally sound and that wiring, plumbing, etc. is up to code. Ask the lender if they have any contingencies that need to be met.  After listing their requirements, your realtor will put the offer in writing and give it to the listing agent.

“Have all of my contingencies been met?”

The time between the seller accepting your offer and closing the loan is called the escrow period. A lot can go wrong here. You will secure the mortgage that you got preapproved for earlier. The home must undergo a very thorough inspection. Finally, all the contingencies you requested in your offer must be fulfilled and inspected. Before you close on that mortgage, so be sure to ask if all of your contingencies have been met.

“How much does closing a mortgage cost?”

This is a very important question to ask. The answer is always more than a thousand dollars. There are always variable expenses, such as purchasing amortized interest points. These costs can run thousands of dollars more than you expected but are optional. Have a little extra money stashed away or ask that closing costs be paid for by the seller.

“Are there any hidden costs?”

One of the most important questions buyers should ask lenders is “Are there any hidden costs?” By the time buyers have closed on a home they will have spent thousands of dollars and so will the sellers. Home shopping can be very expensive. You will have to pay for a home inspector at least once. The lending institution may require you to purchase insurance, which is also expensive. An escrow account will need to be set up. Ask your lender what those costs are.

By asking the right questions you can go into the homebuying process like an expert. You can better prepare yourself for hidden costs and understand what you need to do. More importantly, you can know what you should expect from others.