If homeownership is at the top of your 2021 to-dos, getting pre-approved is one of the first, and most important, steps. While prospective lenders will have plenty of questions for you, don’t be afraid to find the right lender and loan by asking a host of questions all your own.
Here are a few to get you started:
1. What type of loan do you recommend for me? Why? There’s no one type of mortgage loan that’s superior to another—but whichever you choose, you need to know why it’s best and how it works.
2. Will my down payment vary based on the loan I choose? If you’re tight on cash or don’t want to be cash poor, let your lender know. Loans vary in their down payment requirements.
3. What is the interest rate and the annual percentage rate (APR)? Everyone talks about the interest rate, but the APR is just as important. It combines the interest rate with the fees a lender charges to originate your loan.
4. Can I lock-in an interest rate? If so, for how long? If you think rates will be moving up, ask if you can lock it in for a set period of time.
5. What will my closing costs be? Are they a part of my loan, or will I pay them in cash at closing? Remember, closing costs usually run 3-6% of your loan value so you need to know how they’ll be covered.
Don’t understand something your lender says? Stop and ask for clarification.
This is your home buying journey, and you deserve to understand the process every step of the way.
Keep in mind that since a pre-approval is only valid for 30-90 days, depending on the lender, you’ll want to wait to meet with lenders until you’re ready to buy.
Thinking about taking this first step to homeownership? Hop on the 90-Day Challenge with us (link in bio!) or simply shoot me a message and let's chat!
Mike Z. Haque