Questions to Ask Your Mortgage Consultant

What will the closing costs be?
These are expenses that must be paid when a loan is closed, title transferred, and loan money given out. They include things such as an origination fee, appraisal fee, credit report, attorney fee, title insurance, recording fee, survey, termite inspection, etc. Every lender must give you an estimate of the closing costs within a few days after receiving your application.

What prepaid items will I pay?
When you close on your loan, you will have to prepay some expenses for your home that will occur in the next year. Taxes and insurance are examples. Interest is another. You may have to prepay interest on your loan from the day the loan closes until the end of the month. That's called accrued per diem interest.

How long will loan approval take?
This can be very important, especially if you need to close on a house quickly. Processing and approval times are different for different lenders. Be sure to ask how much time to allow.

Is there a prepayment penalty?
There may be times when you want to pay more than your scheduled mortgage payments, allowing you to pay your loan off early. Be sure to ask about prepayment policies.

What loans are offered?
Know your choices. If a lender offers you a loan that you've never heard of before, make sure you learn how and why it's different. Ask for guidance and suggestions. There are a lot of loan programs available on the market. Understand the pros and cons for your situation.

Is there an interest rate lock-in policy?
Ask if the quoted rate is guaranteed, and for how long. Is there a written lock in agreement?

Does the loan have a call option?
A call option would allow the lender to require you to pay off the full loan balance at a time before the full term of the loan.

What are points?
A point is an up front fee the lender charges. One point is equal to one percent of the loan amount. For example, one point on a $45,000 loan would be $450. The lender determines how many points are charged. Many lenders allow customers the option of paying "points" in exchange for a lower interest rate on the loan. Points are paid at closing, either by the buyer, the seller, or split between them subject to government guidelines or your sales contract.