Many lenders will readily list the advantages of borrowing money, but borrowers should have a firm understanding of the mortgage application process and what follows.
Not all loans are created equally and there are some things lenders and banks simply avoid discussing with potential borrowers. If you are considering applying for a mortgage loan, asking the following questions can help you better understand loans and how they work.
1. What Type of Mortgages Do You Offer?
There are many different types of mortgages and the type you choose should be based on your finances and personal needs. Ask your lender about the advantages and disadvantages of the following types of mortgages:
- Fixed rate
- Interest only
- Adjustable rate
- Negative amortization
Some borrowers may be eligible for more than one type of mortgage but sometimes, lenders fail to discuss all the available options with borrowers.
2. Are There Any Additional Fees?
Many banks charge additional fees for credit checks, appraisals, and escrow, and it can help to know the total cost of a mortgage before you fully commit. Ask for a list of fees upfront before signing anything.
3. What is the Interest Rate?
The interest rate of a mortgage helps determine the total amount a borrower will have to pay back. The lowest interest rates are usually reserved for borrowers with the most stable credit histories.
4. Is There is Prepayment Penalty?
Many states still allow mortgage lenders to charge prepayment penalties. These penalties are incurred if a borrower pays off a loan early. If a lender does charge a prepayment penalty, be sure to ask about the terms and amount of the penalty.
5. What is the Loan Processing Time?
It can take anywhere from three weeks to two months to process a loan. This can be inconvenient for buyers in need of a definite closing date, so before you sign for a loan, you should attempt to coordinate a final closing date to avoid any potential problems.
Applying for a mortgage can be a complicated process. Contact North Coast Financial Inc. today to learn more about mortgages.
This is a collaborated post.