3. What are my closing costs, and will you provide a good faith estimate of these costs up front?
Mortgages come with fees for various services provided by lenders and other parties involved in the transaction. You want to know what those fees will be as early as possible. Artemis Mortgage will provide you a written good faith estimate of closing costs within three days of receiving a loan application. Many experts advise against using a lender or broker who is unwilling to do so. For Texas, this is a requirement for all lenders and brokers.
4. When can I lock in the interest rate and what will it cost me to do so?
Your interest rate may fluctuate between the time you apply and closing. To prevent it from going up, you may want to lock in the rate, and even points, for a specified period. Ask your lender if lock-in fees apply. Also, find out what the experts are expecting rates to do, read the Rate Trend Index by our friends at bankrate.com.
5. Is there a prepayment penalty on this loan?
There may be a prepayment penalty on your loan. Some penalties are 1 percent of the loan amount, others are equal to six months' interest, some apply only when you refinance or reduce the principal balance by more than 20 percent, and some kick in if you sell your home. Find out the duration of any penalty period and how the penalty is calculated. Some lenders offer lower interest rates to buyers who accept prepayment penalties.
6. What is the minimum down payment required for this loan?
The rate and terms of your loan will be based on a down payment figure, typically 3 to 20 percent of the purchase price. If you can put more money down, you may be able to lower your rate and improve your terms; if you come up short, you may be required to purchase private mortgage insurance (PMI).
7. What are the qualifying guidelines for this loan?
These requirements relate to your income, employment, assets, liabilities and credit history. First-time home buyer programs, VA loans and other government-sponsored mortgage programs typically offer easier qualifying guidelines than conventional loans however you must qualify with the program guidelines.
8. What documents will I have to provide?
Most lenders will require proof of income and assets before approving your loan, and may require other documents as well. Buyers with excellent credit may qualify for a no-documentation or "no-doc" loan, but they can expect to pay a hefty down payment and higher interest rate.
9. How long will it take to process my loan application?
The answer will depend on a number of variables. When the loan business is brisk, underwriters get backed up, verification takes longer, appraisals move slower and other bottlenecks develop along the loan pipeline. Lenders may say two weeks, but 45-60 days is probably more realistic in most cases. You'll need their best guess to determine how long to lock in your loan.
10. What might delay approval of my loan?
If you provide us with complete, accurate information, the loan process should run smoothly. If the underwriter discovers credit problems, however, there could be delays. Make sure you notify your lender if you change jobs, increase or decrease your salary, incur additional debt or change marital status between the time you submit an application and the time the loan is funded.
Artemis Mortgage, Ltd. will walk you through all of the variables for your loan options to ensure that you are making smart decisions that best meet your borrowing needs.
