When you’ve begun the search for a lender, it’s easy to feel like you should pick anyone that will offer you a deal. After all, you are the one in need, and they are willing to fulfill it. But, both you and the lender need each other.

To them, you are an essential customer whose business is critical.

Therefore, you have to ask a few questions to make sure that you’ve picked the most suitable company, package, and interest rates. Here are our picks for the top 9 most important questions to ask a mortgage broker.

What to Ask a Mortgage Broker

1. How Much Can I Borrow?

By asking how much you can borrow, you can get a rough idea of how much savings you’ll need on top of the mortgage. To find this figure, lenders consider your income, debt, credit history, and employment.

You can also ask the mortgage lender to pre-approve you for a mortgage. This makes the experience going forward smoother, as you do your home shopping.

2. What Kind of Documents Will I Need?

Certain documents are usually needed for loan application. If you cannot get them, the loan process will be quite hard.

Before both you and the broker get ahead of yourselves with planning the details, find out which documents the company will be asking for. They usually include identification, income, bank accounts, and property statements.

3. How Much Do I Need To Pay Upfront?

Down payments are a significant part of your mortgage process. This mortgage question is one of the most important ones. Find out from your loan broker what the minimum down payment is for your mortgage.

To get the best terms and the best interest rates, you should note that the bigger the down payment, the better. Try to pay at least 20% of the price upfront.

You can still get qualified with lower down payments. But lower down payments increase the chances that an extra monthly private mortgage insurance payment will be added to your loan. Lower down payments also affect your interest rates and other terms.

While you ask about the down payment limit, make sure to ask your broker about how the down payment will affect your loan.

4. Are There Any Down Payment Assistance Programs That I Qualify For?

Down payment assistance programs subsidize the cost of your purchase. These programs include first-time homebuyer programs. They are worth looking into before getting your loan. Some properties also qualify for these programs.

5. What Is The Interest Rate?

This is a significant mortgage question. Make sure you get a direct interest rate quote from the lender. You will also need the Annual Percentage Rate (APR) for the loan.

The difference between the interest rate and the APR is fees and extra charges. The APR accounts for all the expenses that will be incurred during loan processing. With these two figures, you’ll be able to compare mortgage deals between many lenders.

6. Are You Doing a Hard Credit Check on Me Today?

Hard credit checks happen when a lender checks your credit before making a lending decision. These can be done by credit card issuers as well as your mortgage broker.

These checks can either lower your credit scores or have little effect on them. However, these checks are put on your credit report and stay there for up to 2 years.

Having many hard credit checks on your report can lower your credit score because lenders will suspect that you are racking up debt and in need of cash. Thus, if you’re shopping from more than one lender, it’s better to have all the hard credit checks happen in a short amount of time.

One week is recommended. This way, the checks will have a minimized impact on your score.

7. Can I Get a Fixed Interest Rate?

Fixed interest rates stay the same for the whole mortgage period. However, adjustable interest rates change according to the market. The benefit of a fixed rate is a reliable payment scheme.

The advantage of an adjustable interest rate is that it can sometimes go lower than the fixed rate. But it can also be higher. Overall, it is better to lock your interest rates. Beware of extra charges for “locking” your interest rate. It can indicate an untrustworthy lender.

8. What Are My Closing Costs?

Closing costs are fees which will be charged by third parties at closing. These include property taxes, appraisals, and title searches. They usually range from 2 to 5 percent of the purchase.

These costs cannot be avoided, as the state usually requires a few inspections before the end of the mortgage.

Closing cost will be included in your official loan estimate, but it’s essential to ask about them in the beginning so you can budget properly.

9. Could Anything Delay My Closing?

Buying a home is a complicated process, so delays are typical. But the best way to avoid them where possible is to ask where potential delays could occur. Stay in touch with your lender, provide up-to-date documentation, and try to be proactive.

Remember that the decisions you make during this meeting will affect a big chunk of your life. Take this list of questions with you so that you don’t forget to cover something that could save you thousands of dollars.

Go Ahead

Since both parties have something to gain from a mortgage, you need to look out for your own interests. The terms and conditions of the mortgage have a significant impact on you. After you ask a mortgage broker these questions, you are ready to decide.

Check out our other articles for more helpful tips.