6 Questions to Ask Before Applying for a Home Loan
When purchasing a home at the Lake of the Ozarks, you want to ensure that you're making the right selection when it comes to the loan option you choose, as well as the lender you choose to work with. MHQ - Mortgage Headquarters has more than 20 years' experience in the mortgage industry, so we can confidently answer many of your mortgage lending questions. Take a look at the 6 questions we've come up with that you should ask your lender before applying for a home loan.
1. What Type of Loan is Best for Me?
Any reputable lender will find out more information from you to better serve your needs before recommending any given loan option. Since each loan option requires a different set of stipulations to be met for approval, it's virtually impossible to say with confidence what loan would best fit your needs without gathering information first.
2. What is the Interest Rate and Annual Percentage Rate
The annual percentage rate (APR) is derived by a complex calculation that includes the interest rate and all the other related lender fees divided by the loan's term. If your interest rate is adjustable, ask about its adjustment frequency, maximum annual adjustment, rate cap, index and margin.
3. What are the Discount Points and Origination Fees?
This is something you should definitely ask about as it will directly affect your monthly loan payment amounts, as well as your total pay back amount over the life of the loan. Each "point" is equal to 1 percent of the loan amount. Therefore, 2 points on a $100,000 loan cost $2,000. Points "buy down" the interest rate, meaning the more points you pay, the lower the interest rate. Points are also tax deductible, even if the seller pays some or all of the points. Origination fees may be charged by some lenders in addition to points. These are fees charged by the lender upon entering into a loan agreement to cover the cost of processing the loan.
4. Do You Offer Loan Rate Locks?Interest rates fluctuate and change daily. If you have reason to believe that interest rates are moving up, you might want to lock your loan. Lenders typically charge zero to one point to lock a loan rate and points.
5. Is There a Prepayment Penalty?
Typically, prepayment penalties let the lender collect an additional six months of "unearned interest" if you pay the loan off early through a refinance or sale of the property. Some things you'll want to find out are how much the prepayment penalty will be, how long the penalty fee is in effect for, and if the penalty fee still applies for refinancing.
6. What Are All the Closing Costs?
Your closing costs will include a variety of expenses over and above the price of the property. Some of the recurring costs include property taxes and homeowner's insurance. The non-recurring costs related to conducting the real estate transaction include loan origination costs, title search fees, surveys, credit report costs, origination points, discount points and other miscellaneous expenses. An estimate of these fees constitutes what is now called the Loan Estimate, which the lender is required by federal law to give to you.
By asking these questions before applying for a loan, you'll be more confident in your mortgage lending options and have a better understanding of how you can save money in the future and achieve your financial goals. If you have any questions about financing a home at the Lake of the Ozarks, feel free to contact us! MHQ Mortgage HeadQuarters are your mortgage professionals at the Lake of the Ozarks and would be happy to assist you in selecting the best mortgage loan for your needs.
Mortgage Headquarters of Missouri, Inc
4824 Osage Beach Parkway, Suite 1
Osage Beach, MO 65065
Office: (573) 302-9990
Toll Free: (888)799-1206
Fax: (636)648-9917
Email: info@mhqmortgage.com
NMLS # 1229111
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