BiggerPockets

Things That you Shoulb Be Familiar With in Shopping for Real Estate Property

Saturday, May 28

Looking for a mortgage is an essential part of the home buying process which will not just impact how you'll find a house you can afford, but what will happen to your finances in the future. Knowing the things that you should ask about when shopping around for a mortgage is also important because you'd want to be steered to the right direction. The best way for you to ask a mortgage broker the right questions is to understand what this would mean to you as a home buyer. Here are a few questions which will definitely help you out with picking the right mortgage broker to work with during the home buying process:

1. "What kind of mortgage would be best for me?" - The response a mortgage broker will give to this question is crucial. Ideally, a mortgage broker should ask you several questions about your situation. He or she should know more about your financial capabilities, your personal circumstances, what you can and can't afford, your lifestyle, and your preferences before making a recommendation. A broker who answers with a direct recommendation may be skipping over parts that are essential to help you arrive at the kind of mortgage which will be something you can stick with for the years to come.

2. "Tell me more about your interest rates." - If you're leaning towards adjustable rate mortgage, ask about their policies on the interest rates. What's the cap to the adjustments, how much can you expect to be the maximum adjustment of the rates per year? This is something that you should particularly be aware of because you'd want to minimize the risk of paying mortgage that has the tendency to have an interest rate that's shooting off the roof every year. This will help you compare specifics between lenders.

3. "What are the fees that will be involved with the mortgage?" - The lender will give you a list of estimated fees called GFE (Good Faith Estimate). Ask about the items in this list and ask which ones originate from them so that you can ask for a discount. Ask which ones originate from third parties and by how much the estimated cost could still adjust. Some adjustable items have a cap on how much they can adjust and some don't.

4. "How much is the prepayment penalty" - Lenders usually impose a prepayment penalty if you decide to pay off the house in full rather earlier than agreed upon. If for example your mortgage term is 30 years and on the 20th year you came into some money and you want to pay the principal in full, there's usually a penalty for this because of the money they will lose in terms of unearned interest.

5. "How long will it take you to fund a loan?" - This is an important question to ask because you'd want to know how long you should expect before you can really have the money to buy the house you want. The last parts of the home buying process requires you to coordinate a lot of things. The timing with which you will move out of your current house (even more difficult if you're renting) and move in to the new house.