Home Finance - 20 Questions For Your Lender

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Home Financing: 20 Essential Questions to Ask Your Lender


Overview

Navigating the world of home finance can be both exciting and overwhelming. With a plethora of options available, it's crucial to ask the right questions to ensure you're making the best decision. Here are key questions to discuss with your lender to protect your interests.

Key Questions for Your Lender


1. Interest Rate: What is the current interest rate?

2. Annual Percentage Rate (APR): What does the APR include, and how does it affect my loan?

3. Adjustable Rate Mortgage (ARM): If considering an ARM, what is the initial rate and how might it change?

4. Rate Caps: What are the annual and lifetime caps on my rate and payment?

5. Adjustment Frequency: How often and when will the rate/payment be adjusted?

6. Rate Index: What index is used for the rate, and what margin is added?

7. Credit Life Insurance: Is this insurance required, and how does it affect my payment?

8. Fee Waivers: Are there any fees that can be waived?

9. Prepayment Penalty: Is there a penalty for paying off the loan early? How much and how long does it apply?

10. Extra Payments: Can I make extra principal payments without penalties?

11. Rate Lock-In: Is a rate lock-in available, and can I get it in writing?

12. Lock-In Timing: When does the lock-in occur - at application or approval?

13. Rate Drops: If rates decrease, can I secure a better rate?

14. Inspections/Surveys: What inspections or surveys are required?

15. Title Search/Insurance: Is a title search needed, and what does title insurance cost?

16. Prepaid Costs: Can you provide an estimate of prepaid amounts at closing?

17. Discount Points: Are there points to reduce the interest rate, and what are the costs?

18. Taxes: What state, local, stamp, and transfer taxes will I owe?

19. Flood Determination: Is a flood determination necessary, and why?

20. Additional Costs: Are there any other costs or important details I should know?

Final Thoughts

Though lenders might find extensive questioning challenging, it's your right to gather all necessary information before committing. Even a 1% increase in interest rates on a $150,000 loan could mean an extra $30,000 over the life of the loan. Asking the right questions not only saves money but also provides peace of mind in your home financing journey.

You can find the original non-AI version of this article here: Home Finance - 20 Questions For Your Lender.

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