1. WHAT TYPE OF LOANS DO YOU OFFER? WHAT ARE THE QUALIFYING GUIDELINES FOR EACH?
Since there are many different types of mortgages, including:
this is just to name a few, it’s important to know which type of loan the lender can offer you.
Don’t be afraid to ask them to take the time to explain each one to you and their pros and cons. Make sure that the lender is recommending specific loans only after finding out about your particular needs and qualifications, and not just pushing their own agenda.
Ask why they think a specific loan would work best for you.
2. WHAT IS THE INTEREST RATE AND ANNUAL PERCENTAGE RATE (APR)?
The interest rate is going to be based on the size of the loan and on your credit score.
Interest accrues over the life of your loan and over a 15-30 year span, can add up considerably. If the interest rate is adjustable (as in an Adjustable Rate Mortgage or ARM), ask how long the rate will remain fixed, and about the maximum annual adjustment, highest rate (cap), index and margin.
The APR includes both the interest rate and all other lender fees, divided by the loan’s term.
3. WHAT’S THE MONTHLY PAYMENT GOING TO BE?
As you’re trying to develop a budget after your home purchase, you’re going to need to know what your monthly expenses are going to look like.
Make sure you include taxes and insurance in their calculations. Remember that your monthly payment shouldn’t be so large that you can’t also budget for unexpected expenses and a retirement fund.