Questions That Must Be Answered By Your Mortgage Broker
Do not decide to work with just whoever old mortgage broker. Even if you have had to search harder for lenders willing to work with you because of your bad credit, still take the time to interview some candidates to be able to select a dependable company. Here are ten questions you should ask your mortgage broker.
Which Loan is Best for Me?
It is vital that the broker is working hard to find you loan options which are most suitable for your situation, whether or not you have bad or good credit. Brokers would normally have access to more loan products from a bigger pool of lenders. It is essential to compare lenders to be able to obtain the best rate. Whether you are in the market to obtain a property or refinance bad credit, it is vital to pick a broker who would work on your behalf and look out for your best interests. If you get the sense that the lender or mortgage broker does not truly understand the business or is trying to steer you into a cookie cutter loan, look for a different representative.
What is the Real Interest Rate on the Loan?
On the loan, the APR or also known as annual percentage rate refers to things like the margin, points, interest rate and the closing costs. For individuals who have bad credit, house loans will have interest rates which are higher. It is important to check that you are being given accurate estimates based on your credit score. In addition, if you are being offered an ARM or Adjustable Rate Mortgage, find out how often the rates could be adjusted, what the rate cap is and what index is utilized to figure out the interest rate.
What Are the Costs for Obtaining a Loan?
Included in the closing costs are an appraisal, the title search, taxes, document preparation, a survey and recording fees. You would likewise be required to pay closing costs for bad credit refinance loans as well.
What Are Points and Origination Fees?
If you have bad credit, paying points is a way to lessen the interest rate on a mortgage refinancing or purchase you could not afford otherwise. Each point is worth 1 percent of the whole amount loaned. An origination fee is money you have to pay to set up your new loan when refinancing. Origination fees could range from around 1% to 5%. It is better to talk to your broker and see if they can lessen or eliminate this fee.
How Does the Mortgage Broker Get Paid?
A good mortgage broker would be up front and honest with you on how they get paid. The broker does not make any loan deals, they instead work with the lender and the borrower to find the right deals. For example, if you have bad credit, it is important to find a broker who can match you with mortgage lenders who work with such customers. Usually mortgage brokers can be paid by lenders and customers and be given commissions. The yield spread premium is a commission which your broker can receive from a lender to mark up the interest rate of your loan.
Will You Provide An Approximate of Closing Costs?
After you apply for a loan, you would likely receive in 3 business days a GFE or likewise known as Good Faith Estimate of the closing costs. If lenders know that they need to compete for your business, they may be more willing to supply this information prior to you actually applying.
How Long Would It Take To Process a Loan?
Processing a loan could take anywhere from 45 to 60 days or possibly even longer. When drawing up a mortgage agreement, your broker should include the closing date. The broker should be able to explain any potential problems which may happen, explain the process of the loan and deliver a time frame for when the money would really be available.
What Documents Will I Need to Apply For a Loan?
There are some specific documents required nowadays in order to secure a loan. The days of no-document mortgage loans have come to an end. Like for example, you would need to provide proof of income and proof of asset along with documents like for example W-2 forms, pay stubs, tax returns, invested statements and canceled checks. If you have had credit problems before, it would be even more necessary to show a recent and stable financial history.
Would You Lock In My Interest Rate?
Mortgage rates could fluctuate and may change during the time your loan is being processed. Ask your broker if there is a fee to be able to lock in a rate and how long it would last.
Is There A Fee for Paying Off a Loan In Advance?
This can become vital if you later decide to sell your home or refinance. Check out ahead of time how long any penalty period will last and if it would apply if you choose to refinance through the same mortgage lender.
Prior to choosing a mortgage broker to work with, make sure to acquire all of the facts. Buying a home or refinancing is a huge commitment and you need to be certain you can trust whoever you hire.
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