Daunting is the task of meeting with a mortgage lender, there’s no way around it. Having your entire financial history (and future) put under close inspection is stressful to any person young or old. Your innate desire is going to be to get in and get out and figure everything out on your own with documents in hand. It’s not wrong to feel this way, but you can’t let yourself slip away without asking several key questions to your mortgage lender while you’re in their office.
The more information you can gather the better when it comes to such a heavy financial responsibility such as a mortgage on a new home. Overall, it’s good to spend ample time talking with a mortgage lender you trust to find the best loan before making an offer on a home. We’ve come up with four key questions to ask that should prove more than helpful.
What’s My Monthly Payment?
This is the most relevant question to ask, since this is the amount you can (hopefully) afford to pay on a monthly basis. Your monthly mortgage payment is obviously found by assessing how much you can afford to allocate money to a payment each month without going broke. This payment will include a portion of your principal debt, as well as interest, homeowner’s insurance, property taxes, and a couple service fees.
Talk extensively with your lender about how much hidden costs like maintenance and repairs may impact your ability to make your monthly payment. You don’t want to spend everything you have on your home without leaving some for the cost of living, and other things like gas, and Netflix subscriptions.
What’s The Lowest Down Payment?
It’s no secret that when you’re buying something expensive such as a car or a home, the higher amount of money you initially put down, the better. A big down payment is tough for a lot of people because it requires either diligent saving or a lucky financial break. Standard down payments for a conventional loan is usually 20% of the home’s total value.
There are things such as FHA loans, though, that could get you to owning a home a lot quicker. Search for different kinds of loans that allow you the ability to purchase a home with a higher interest rate that come with a lower down payment needed at signing if that works better for your financial situation.
What’s My Lowest Interest Rate?
Your credit score amongst several other factors determine the interest rate you pay monthly on your home. It’s vital to understand the difference between the monthly interest rate versus the annual percentage rate (APR) because both of these are driving factors in the types of deals you can choose from.
Is My Mortgage Fixed Or Adjustable?
The housing market is in constant fluctuation so it serves to ask if your mortgage is going to stay the same or change over time. It’s important to ask questions to your lender about your options for a fixed mortgage or an adjustable-rate mortgage (ARM.) A lot of folks out there swear by fixed-rate mortgages, but there are factors that drive people to other options.
If you’re unsure of the amount of time you’ll be spending in the home, or if you intend to fix it up and sell it somewhat quick, an ARM may be smarter. The only thing to look out for is the frequency at which your rate will change.
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Real Estate Solutions Group aka RESG is Washington’s most innovative real estate team. Serving the greater Seattle Metro for luxury homes, residential home buyers, home sellers, real estate investors, new construction, land, and land development.