Mortgage lenders can help you land your dream home or get the starter home you need right now.
But to get the most out of the mortgage industry, you’ll want to pick the right lender. Building a list of potential lenders is just the start. After that, you need to ask some questions to ensure you’re trusting the right person with one of the biggest loans you will take in your life.
In this article, we will go over:
- The questions to ask your potential mortgage lenders
- What to know before meeting them
- What you should avoid saying to them
26 Questions to Ask Your Mortgage Lender
These are the questions to ask your mortgage lender. Of course, where appropriate, if you can verify the answers (with absolute certainty) to any of these questions without asking them directly, then that’s fine too.
- Which types of mortgages do you offer?
- What repayment terms do you offer?
- What organization do you represent?
- Will you service my loan, or will I be dealing with another company to service my loan after closing?
- If you are transferring my mortgage to another loan servicer, can you tell me about them and put us in touch?
- What is the par rate for your standard 30-year fixed-rate mortgage?
- Can you explain all your fees to me?
- Do you charge prepayment penalties?
- Will you hold my loan, or will you sell it?
- Have you helped other borrowers in a similar position to myself?
- What is your interest rate, and why?
- What is the APR, and can you list out every factor that goes into it?
- How do I know that this is the best rate I can get?
- For this adjustable-rate mortgage, what is the worst-case scenario when it resets?
- Will you lock in my rate, and if so for how long?
- Do you require deposits for a mortgage rate lock, or do you charge a fee for that?
- Do you charge an origination fee?
- Do I need to pay for mortgage insurance under the conditions you are offering me?
- Is this the minimum down payment, and if not, what is?
- Do you offer down payment assistance?
- What are the income and credit requirements for this mortgage?
- When will you be performing a hard inquiry on my credit?
- Do you offer mortgage points?
- Can you give me an estimate of the closing costs?
- Can you give me a timeframe for the entire process, from my application until closing?
- Will I be signing the paperwork in person, or are there other arrangements I need to know about as a Covid-19 precaution?
Get the Complete Picture
When you add these questions all up, you gain a complete picture of who you’re dealing with and what they’re offering. More specifically, you will understand:
- The party (or parties) you will be dealing with
- The types of mortgages and terms they are offering you
- Potentially unexpected (and annoying) factors such as prepayment fees
- The total cost you can expect to pay, including fees
- What is required of you during the entire process
Lending Regulations
You need to know that mortgage lenders you’re considering follow the regulations established by the federal government. The mortgage industry is regulated by a large collection of acts passed by Congress.
Lenders are also not allowed to discriminate or lie to consumers, among other things.
In the US, mortgage companies are regulated by many federal agencies. It’s a particularly confusing situation, relative to many other countries’ mortgage regulations. But mortgage lenders are required to follow a large collection of laws and regulations.
Enforcement
In the US, the Consumer Financial Protection Bureau (CFPB) enforces mortgage regulations. In the case of FHA loans, the Department of Housing and Urban Development oversees these programs.
We highly recommend referring to Regulation Z (The Truth in Lending Act) to arm yourself with the information you need to know about:
- Annual percentage rates
- Credit card disclosures
- Periodic statements
- Mortgage loan disclosures
- Mortgage loan servicing requirements
- Mortgage loan appraisal requirements
What Should I Know Before Meeting a Mortgage Advisor?
Using a mortgage advisor or broker to source your mortgage and arrange for it can make sense.
Their professional knowledge and skillset can help you navigate the marketplace and secure the best possible mortgage for you. But before you go ahead and trust them, there are a few things you should make sure of.
If you use a Broker
It’s a good idea to stick with brokers certified by the National Association of Mortgage Brokers, which collaborates with similar organizations internationally to promote with collaborators in the International Mortgage Brokers Federation.
This organization provides education and certification to brokers while promoting ethical and professional behavior from its members.
What Should You Not Say to a Mortgage Lender?
While mortgage lenders are the ones who must follow relevant regulations, some things are also required of you.
First and foremost, you should never say anything untruthful. First, lying can destroy your chances of getting approved, second, lying on your mortgage application is a felony.
Beyond that, we can only recommend that you don’t say anything silly that would ruin your chances of approval. Specifically, don’t joke around or ask questions in a way that makes you appear unreliable.
During your application, you will divulge a lot of information that the lender will use to determine whether they should approve you or not.
Mortgage Lender Topics to Discuss
When dealing with mortgage lenders, you want to make sure you understand those important points we covered above:
- The party (or parties) you will be dealing with
- The types of mortgages and terms they are offering you
- Potentially unexpected (and annoying) factors such as prepayment fees
- The total cost you can expect to pay, including fees
- What is required of you during the entire process
In addition, you want to make sure the loan originator/loan officer is registered under the Nationwide Multi-State Licensing System and Registry so they can legally originate the loan.
By going over the list of 26 questions above, you can have this information answered for.
