Now that you have decided to buy a new house, or are planning to refinance, it is time to call the bank or the mortgage company and apply for a loan or a mortgage. However, there are some things that you should know about the mortgage or the loan before you apply for one. For example, is this the right mortgage for you? Or, are you dealing with an honest person or a good company? Sorted out from the everlasting list of these questions are eight questions that could be of much help to you once you go out finding the right deal for yourself.
1. Does the mortgage charge an application fee? And, if for any reason I do not get the mortgage, is the application fee going to be returned?
Nowadays, not many companies or moneylenders charge application fee. This was more prevalent some years ago. As of now, most of the financial institutions already have you pre-qualified before they accept your application. So, if the mortgage company insists on an application fee, they should have a reasonable answer as to why they charge it. Also, application fees sometimes do include an appraisal fee. Be sure to check on that one, too. Your existing property, or the one that you intend to buy, will definitely need an appraisal and someone has to pay that.
2. How many points shall I be paying in respect to the mortgage?
This is a very important question that you should ask the bond originator upfront. If you are not satisfied with the number of points, you should probably look for some other companies and compare their points. Points hold practically no value if you are getting the loan on an excellent interest rate, or even if you plan to not pay off the full mortgage for many years. However, if you have a strong financial backbone or earn a handsome salary and plan to pay off the loan in two years or maybe less, try to negotiate for a zero point or nil point mortgage.
3. Is my mortgage rate going to change?
Going for a fixed mortgage rate is always helpful and beneficial, try to maintain that. However, a lot of banks and mortgage companies have offers wherein they get you started with lower monthly repayment plans, and then gradually increase them. Be sure to check the rates till the last. Also, do not settle for anything in the future that you might not be able to pay.
4. Are there any other closing costs that I should be prepared for?
Before you finalize your mortgage or loan, ask the bond originator for an accurate idea of the closing costs. Also, tell them that you are trusting their information for your future repayments. This will be needless in case you are going to buy a property or an estate since you will have your attorney with you. Still, getting firsthand knowledge from the bond originator will not do you any harm.
5. If I make a late payment, what would the late fees be?
Before asking this question, tell the originator that you do not intend to make late payments. This is just for your information. Ask him or her about the late fees. Normally, four percent is about enough. However, if you get the answer that ranges from twelve to fifteen percent, you might want to consider other options.
6. Am I entitled for a discount if I opt for automatic debit?
Not many banks and mortgage lenders offer this facility. However, there are a few of them who actually offer you a decrease in the interest rate if you opt to have a direct debit facility activated in your checking accounts towards the monthly repayments.
7. Am I allowed to buy down the rate of interest?
The term buying down means that you pay some extra points to obtain a lower rate of interest. Like the same as above, these are not popularly in use everywhere nowadays. However, this can give a positive idea about you to the bond originator. They won’t just see you as regular everyday customers; instead they’ll know that you do possess some extra information about mortgages and loans.
8. How much of the Escrow is the company or the lender keeping after the payment of my taxes as well as home owners insurance?
The basic thing here is that companies and lenders normally charge you with an increased percentage of your monthly repayments so that they can take care of your taxes and insurance. However, there are some companies who tend to keep a lot of your money in their escrow accounts even after the complete payment of your taxes and insurance.