Before you shop for a house, it’s smart to shop for a mortgage lender. You’ll want to make sure that the mortgage broker or lender is the right fit for you before you commit to a loan. How do you do that? Knowing the right questions to ask can help you determine whether you’re comfortable with the broker before you apply for a home loan. You’ll want to choose a lender who is knowledgeable and confident in answering your questions. Don’t be hesitant when it comes to sharing information about your personal situation with a potential lender, because knowing more about you and your finances will help your broker give you more accurate information and better advice.

Here, we offer a list of questions to get you started:

1. How much money am I pre-qualified to borrow? It’s important to establish how much house you can afford before you begin your house hunt, so meeting with a mortgage lender before you meet with a real estate agent is a smart move. The lender can pre-qualify you for a mortgage, so you’ll know exactly how much money you’ll be able to spend on a house.
2. What kind of mortgage is the best option for me? A reputable lender will take the time to analyze your financial situation and unique needs in order to give you good advice about the options available to you. Do you need a fixed rate mortgage, or would variable be better for you? Is a conventional loan the way to go or should you apply for a government loan? Do you qualify for a VA loan? The right lender will take the time to discuss the pros and cons of different types of loans in order to help you find the right fit.
3. How much of a down payment will I need? The ideal down payment is 20%, but that’s not always necessary. Well-qualified buyers may be able to put down as little as 3%, and some programs require no down payment. Bear in mind, though, that a lower down payment may mean more closing costs and an increased monthly payment. Further, you’re likely to get a lower mortgage rate when you put at least 20% down.
4. Will I need to carry mortgage insurance? In most cases, if you put less than 20% down on your home, you’ll have to carry mortgage insurance. Talk to your lender about how much this will add to your monthly payment and whether there are any options to avoid it.
5. Do I qualify for any down payment assistance programs? You’ll want to find a broker who is knowledgeable about local, state, and national down payment assistance programs that could help you.
6. What will my interest rate be? Ask for an estimate of the interest rate and fees, including the annual percentage rate. If you’re considering an adjustable rate mortgage, talk to your lender about the frequency of adjustments to the loan, the maximum annual adjustment, and the highest cap on the rate.
7. How much will my monthly payment be? Principal and interest are only part of the story. Talk to your lender about escrow, taxes, insurance, and any other charges that may influence your monthly payment.
8. What costs will I need to pay at closing? You may be responsible for several different fees when you close on the loan, including appraisal, property taxes, and other closing costs. The lender might also charge an origination fee for the administration of the loan. Knowing upfront what these charges will be and whether you can negotiate on some of them can help you to be prepared.
9. Is there a penalty for prepayment? Some states prohibit prepayment penalties, while in others, a lender can collect up to six months of additional unearned interest if you pay off your loan early. This prepayment may be through a refinance, or it could be through a sale of the property, so it’s important to ask whether this could be a condition of your loan.
10. How quickly will the loan close? Talk to your broker about the average closing time and whether on-time closings are guaranteed. Ask, too, about their policy for communication throughout the process. You want a broker who’ll close on time and keep you in the loop in the meantime. It’s also smart to ask your lender about things you should avoid before the closing, like taking out new lines of credit.

If you’re a first time home buyer, it’s important to find a lender who will work with you and your unique situation. At First Coast Mortgage Funding, we offer creative solutions to help borrowers improve credit and overcome roadblocks throughout the home buying process. Committed to helping people in the First Coast region buy and refinance residential properties, we specialize in every kind of property, working to provide home loans to our clients at the lowest interest rates, with the best possible service. Contact us through our website or call 904.770.5000 to speak to a trust Loan Officer.