Home buying is a daunting task and if you are a first-time buyer, then you will hardly know much about the loan market. You will have to shop around thoroughly and search for genuine lenders who will provide you mortgage loan at suitable terms and conditions. The banks and the different financial institutions provide mortgage loans to the possible borrowers so that they can get money for purchasing home. You’ll have to provide something as collateral for the loan. In case of mortgage loans, your own house acts as a guarantee for the loan. So, if you fail to pay off the loan on time, then the bank has every right to take away your property. Make sure you gather sufficient mortgage information so that you do not face any difficulty once you take out a loan.
5 Questions to ask your lender when you want to buy home
Before you may invest your precious money into a big investment like home, you must know about the mortgage market thoroughly. Have a look at 5 questions that you should ask your lender when you are planning to purchase home.
What kind of mortgage loans will the lender provide?
You must be aware about the fact that there are actually several kinds of mortgage loans available that have been made by keeping in mind the requirements of the borrowers. Some mortgage loan types are fixed rate and adjustable rate. In a fixed rate mortgage, the rate of interest will be the same throughout the term period of the loan. As such, your payments will also remain fixed. On the other hand, for adjustable rate, the interest on the loan will increase or decrease depending upon the mortgage market. As such, your payments will also change from time to time.
Which type of mortgage will be suitable for your situation?
With various mortgage loans available, you should find out which type will actually suit you the best. Well, the lender will evaluate your present income, outstanding debt, down payment amount, assets and any other information related to finance before providing you any loan. Make sure you give all the details to your lender when he asks for them.
How much time it will take to get the loan approved?
Well, this is a very important question that you must consider when you are applying for a mortgage loan. You can ask your lender the exact time it will actually require for the approval of your loan. While talking to your lender, make sure you speak in a soft tone. Thus, by communicating directly with the lender, both of you can build good relation with time.
Do you need to purchase private mortgage insurance?
You’ll have to find out whether or not you need to purchase private mortgage insurance or PMI. See how much it is going to cost you and how long you’ll have to pay for it. Well, you should know that private mortgage insurance is usually needed in case you’ll not be able to make 20% down payment on the loan when you want to buy a house. Once you build enough equity in your house, then the lenders may ask you to discontinue private mortgage insurance.
Will there be any penalty for paying off the loan early?
You may want to pay off the loan early. However, you should ask the lender if there is any penalty associated with it. If you’re thinking to refinance your present loan from another lender within 1-2 years, then you may have to pay a penalty to your lender.
A smart home buyer will make it a point to ask all the necessary questions to the lender before he/she decides to obtain a mortgage. Thus, if you have come into the market to purchase a house, then make sure you ask all the questions that you have in your mind. This will enable you to take out the right kind of mortgage loan as per your exact requirement.