What to look for in a mortgage
Posted on December 11, 2017
Topic Categories: Consumer Help
By Dwayne Holt – Mortgage Lending Director, Cinfed
A mortgage is likely the most significant investment you’ll ever make, and there are many ways to get a mortgage done. So when you’re looking for a mortgage, it’s important to take your time, do plenty of research and ask lots of questions.
You have many options for lenders. Start with referrals from friends, family, your real estate agent, financial planner, or personal tax professional. Be cautious with online reviews, understanding that not all websites and their posted reviews are created equal.
If you start by searching for the best mortgage rates, keep in mind the quote you see online is only a starting point. A lender may need to pull your credit information and review your loan application to provide an accurate quote. Don’t be misled by sites that promote below-market rates just to get you to “click.”
Be sure to consider the closing cost! Rates and closing cost typically go hand in hand: lower rates equal higher costs – and lower costs can mean higher rates. The challenge is finding the best rate at the lowest cost. Most top mortgage lenders offer a well balanced closing cost and rate structure.
However, there’s more to choosing the right lender than finding the lowest rate and closing cost. When you contact potential lenders, talk to them. Did they listen? Did they answer your questions? Did they give sound advice? Keep in mind that most loan originators are commission-based. If you feel pressure to “act now,” take note – high pressure sales tactics should be a red flag. Basic questions and considerations:
- How long are the current turnaround times on pre-qualification, appraisal and closing?
Typically, 24 hours or less for pre-qualification and 5-7 business days for the appraisal. A loan should always be able to be processed and closed within 30-45 days. Quality lenders can close your loan in as little as three weeks from start to finish.
- What fees will I be responsible for at closing (such as commission, loan origination, points, appraisal, credit report, and application fees)?
It is not unreasonable for a lender to request fees once you pre-qualify. Normally, they cover the cost of the appraisal, credit report, and other necessary certifications. Though quality lenders will not typically waive fees, they may reimburse you at the closing. Ask the lender to specify under what circumstances fees will be kept, and be sure to get a specific answer.
- What are the down payment requirements?
The answer depends strongly on the strength of your loan application. In most cases, 10% down results in more attractive financing options. Low down payment loans are available but financing terms will likely not be as attractive.
- Will my loan application be approved locally? Do you intend on selling my loan?
Local processing and approval of the loan application can be important in getting prompt, personal service. It may not matter if your mortgage gets sold to an out-of-town lender, but the more parties involved, the more complicated it can get. For your understanding, it’s fair to ask if your lender will be both making and maintaining the mortgage loan.
Throughout the process, don’t hesitate to ask for an explanation at any point. Your mortgage lender should serve as your partner, and help you make decisions in an informed, confident way. Your mortgage can be a lifetime investment; you want to feel good about the results now and in the future.