Questions for your Lender

Getting pre-approved is a critical part of the purchase process, and you need to do this early on so that you will know how much you can actually afford. The pre-approval process will also make you aware of any credit problems that need to be addressed, if any, so you can take care of them before actually trying to obtain a mortgage; some issues will prevent you from getting a loan, so you want to know about these problems right away, as well as errors on your credit report, which are not uncommon.Here is a list of some questions to ask your lender. This is not, by any means, an all-inclusive list. 

1. Are both fixed-rate and adjustable mortgage loans available?
2. What is the interest rate?
3. How long can I “lock-in” the financing at the current interest rate?
4. Is a float down lock available in case rates drop after I have locked in?
5. What are the other fees a lender may charge me in conjunction with my loan?
6. Are funds for a second mortgage available?
7. On adjustable loans:
   - How often will the interest rate be adjusted?
   - Is there a maximum limit on each rate change?
   - How often will the monthly payment be adjusted?
   - Is there a ceiling on payment adjustments?
   - Can the term of the loan be extended?
   - What is the maximum rate that can be charged over the life of the loan?
   - Is there any potential for negative amortization?
8. Is there a pre-payment penalty clause? This involves extra charges for paying off the loan before maturity. About 80% of all loans in the
   United States are paid off early.
9.  What is the “grace” period?
10.  How late can a monthly payment be made before a late charge is assessed?
11.  What will happen if a payment is missed?
12.  If you sell your house, will the new buyer (if he/she qualifies) be able to assume   your mortgage at the same interest rate?
13.  Do you have to pay “points” to get your new mortgage? Usually lenders charge points for the cost of giving you a mortgage loan. A “point” is 1% of the loan.
14. Will the lender require mortgage insurance?
15.  Is the loan serviced locally (by your lender) or is the servicing sold? And if it is sold, when can that occur?
16.  Ask for a written “good faith deposit”.

There is more information on the loan process and related matters in the Buyer Reports section of my website.

Are You Ready to Buy?

Are you REALLY ready to buy or are you just looking right now? While may be thinking you are ready, your behavior may suggest the time is not quite right. Answer these questions to see if you are prepared to buy…emotionally, psychologically and financially.

 

• Will you be paying cash or have you arranged for financing?
• Do you have a house or condo to sell? Do you have a lease you can break or are you tick for an extended period of time?
• If you went out today and found your dream home, what would you do?
• Do you have a good idea of what you are looking for and what you are willing to trade off?
• Why do you want to buy a new house? Do you have some good reasons (space, financial psychological) for wanting to buy?
• You know yourself better than anyone. Can you HONESTLY say (and look yourself in the face in a mirror!) that you are emotionally, psychologically and financially ready to go? This is a tough one for the first time buyer, and an “unsure answer” or “I’m scared” is perfectly alright.
• How well informed are you about the market in terms of inventory, pricing, marketing time, interest rates, etc.?

A more detailed report on these questions and things to consider can be found on my website and is available for FREE via email.

Why I Wrote this Blog, and Who Should Read It!

I’m a licensed Real Estate agent here in California, and a Realtor (i.e., a member of the National Association of Realtors, and thus subscribe to their Code of Ethics) . But I have also been a homeowner 9 times (well, 9primary homes PLUS 2 vacation homes and a business condo) in 4 different states, so I have a pretty good idea of what it is like to buy, and sell, a home from a consumer’s perspective. And at one point I was a first time home buyer (I’ll use FTHB going forward).

But, in my experience as a Realtor I have also helped many FTHBs get into their first home. Sometimes it was easy, but other times it was complicated, time consuming and frustrating for all alike. But I always enjoy the thrill, excitement and anticipation that I have shared with my clients who are buying a home for the first time, no matter what the cost, style or location.

My reason for this blog is to help YOU, the new buyer, with as much information as I can so you will better understand the buying process and feel as comfortable as possible with your responsibility in this important, and expensive, process. The better educated you are, the easier it will be to overcome the various hurdles you will experience. And with my knowledge, training, and experience, I can help you solve problems that arise, which are inevitable. Buying a home is very exciting, and the feeling of homeownership is like no other. But getting there can be time consuming, exhilarating, and cause a great deal of anxiety. But that’s normal – after all, this may be the most expensive purchase you will ever make.

This blog is intended primarily for those people who have never owned a home before, however if you have been a homeowner in the past, or own a home now, I suspect you will also find some tidbits here to help you, and you may learn some new things along the way.

The information here is to help you get started, and assist you along the way, and I hope you find it useful. Please feel free to ask questions and add comments at any time, so that others may learn as well. It’s a great journey, and I look forward to being there with you before, during, and after.

Cheers,

Jeff