1. Do you have a variety of loan programs to fit my cash flow and expected length of ownership needs?

If you know with 100% certainty you’re going to live in your new home for less than five years, you may want to consider an adjustable rate mortgage or “ARM.”

With an ARM your payments will be lower, but they will go up according to the terms of the loan. Before deciding to move forward with an adjustable rate mortgage, it is imperative that you understand exactly how and when your interest rate will adjust and have a plan to either refinance to a fixed rate or move prior to that adjustment.

If you’re going to live in your new home for over five years, a traditional fixed-rate mortgage is most likely going to be a better plan.

2. Do you offer written mortgage pre-approvals, not just pre-qualifications?

A pre-qualification is usually a Lender’s opinion of your eligibility for a loan. If you ask to be pre-approved, the Lender will actually submit your job and credit history to an underwriter and get a conditional approval for a loan and a loan commitment.

Do you want to get the best house you can for the least amount of money? Get pre-approved.

The advantage of having a pre-approval is that it will make your offer to buy a home much stronger. Price is only one bargaining chip in the negotiations, and not necessarily the most important one.  Plus, a pre-approval will usually allow you to close on the home faster.

This process takes anywhere from a few days to a few weeks depending on your situation. It’s a very powerful weapon we recommend all of our clients have in their negotiating arsenal.

3. Do you have the ability to handle difficult credit history?

Many Lenders will only work with you if you have unblemished credit, and if a problem comes up, they prefer not to help you out.

Make sure your Lender has reviewed and received approval for you and your specific credit history.

4. Is the rate you quoted me the rate I’ll get at closing?

Due to tighter lending standards and increased disclosure requirements, this is not so much the case anymore.  However, some Lenders do advertise their rates in the paper and in homes magazines.  These are called “teaser rates” in the industry.  The name says it all.

After they’ve got you committed to using them, many Lenders then tell you what the “real” rate will be.  By this time, you may have already spent money on applications, credit reports, appraisals etc…  In other words, it could be too late for you to walk away penalty free.

Bottom line: Make sure that the lender you choose to work with discloses all of the applicable loan fees and rates up front and provides you with a Good Faith Estimate for your obligations at closing.

Download this report in PDF: Questions to Ask your Lender Before you Sign Final Paperwork