Questions To Ask Your Mortgage Lender: FAQs
The 14 questions we just went over can serve as your starting point when it comes to choosing a mortgage lender. The next few questions aren’t necessarily ones to ask your potential lender, but are questions you may still have about the process of finding a mortgage lender.
Do you need mortgage insurance?
Mortgage insurance is typically required for most loans with a down payment of less than 20%. The type of insurance varies by loan, and how much you pay can vary by lender. PMI, for example, can cost 0.5% – 1% annually.
How do I prepare before meeting with a mortgage lender?
Although it may be easy to find a lender, you should get one when you’re ready and prepared. Here are a few ways you can prepare as you shop around for a mortgage lender:
- Strengthen your credit
- Determine your budget
- Understand your mortgage options
- Compare rates
- Get preapproved
- Read the fine print
What is a mortgage broker vs. a mortgage lender?
Before you obtain a loan, you should understand how mortgage lenders and brokers differ, so you know whose assistance you require. A mortgage lender works for a bank or financial institution to determine the qualification of borrowers and provide them with funds. However, a mortgage broker works with borrowers to help them shop around and find the appropriate lender for their circ*mstances.
Instead of researching different types of loans and lenders independently, mortgage brokers do the work for you. After they find the right loan and lender for your financial situation, they help you gather the information you need to fill out your mortgage application. As a result of the services brokers provide, you pay them a commission, which is a percentage of your ultimate mortgage amount.
Before choosing to work with a mortgage broker, you should understand how they operate. Some mortgage brokers primarily work with specific financial institutions and promote lenders with whom they have long-standing relationships.
Given the differences in their roles, the questions you would ask a mortgage broker are different from those you’d ask a lender. Here are some important questions to ask a mortgage broker:
- Why should I work with you instead of going to a lender directly?
- How will you negotiate on my behalf to ensure I get better terms for my mortgage?
- How will you find me the right loan type and lender for my circ*mstances?
- How much do you charge for your services?
- Are there any specific lenders you work with frequently?
- Would you feel comfortable recommending a lender you don’t typically work with?
- How long will it take to find a lender?
