For those looking to buy a home in the sunshine state or refinance an existing loan will need to secure a home loan with a quality lending institution. To help the process along, listed below is a list of top five questions to ask your mortgage broker when looking for a home loan in today’s market.
Before moving on to the next four questions, the most important question a home buyer will typically ask the mortgage broker is how much house can they afford? Don’t make the mistake of jumping into the house hunting process without knowing how much house debt you can really take on. Generally, you should try to purchase a house that costs between 1 ½ and 2 ½ times your annual income. A simple example would be that a home buyer who makes approximately $60,000 family income can afford a $150,000 to $210,000 home. Sometimes that is easier said than done because your desired area may not have homes that fall in that range so maybe you will need to look at town-homes and condos that typically cost less than a standard detached home. You will want your monthly mortgage payment to not exceed 30 percent of your gross monthly income. Depending on the mortgage and interest rate you get, you can have a higher debt ratio, but typically your total debt (mortgage payments, credit card and other debt) should not be more than 30-40 percent of your gross monthly income.
The next question should be what kind of loans you qualify for? If you are a first-time buyer, there a few loan programs you can take advantage of like FHA loans or first-time home grants. Your realtor or mortgage broker can advise you on what’s available. Other loans options available are VA loans and conventional loans, all with adjustable, balloon or fixed-rate mortgages. Some things to consider when deciding on the right loan are how long you plan to stay in the home and your future employment goals.
Once you decide on what type of loan and how much you can borrow and find out what the interest rate will be, a good question to ask is how long can you lock down the interest rate? Most lenders will give a 30-day lock on the interest rate but some can give you a 60 or 90-day lock but with a fee. You want to make sure you have allowed enough time for the lender to have all your mortgage paperwork and documents processed prior to the locked interest rate expiring.
Another important question to ask is how much your closing costs will be? This can vary from area to area. For example, in some states it may vary on who pays for the title insurance or home warranty plan? Your agent will be able to give you specific information on what to expect since you never completely know the exact amount until after the loan closes. It will also depend on how many points you pay on your loan (a point is 1% of your mortgage loan amount).
The last question has two parts. First, you want to know how long the approval process will take?. After reviewing the information you submitted, the lender should have a rather firm estimate on when that date will be. Second, ask the date of when they will be sending the final documents to the title company? This is essential to know because you want to confirm that they will have it there at least three days before closing to allow for both buyers and sellers to sign documents and time to deliver signed documents back to lender for final approval. If the lender waits until the actual closing date to do so, it will be impossible for the title company to do the necessary steps to have you close on the projected date.
Now that you know what questions to ask, make the process even simpler by going with an established quality mortgage broker like the Mortgage Brothers Team. The Arizona mortgage experts with The Mortgage Brothers Team will search for the best loan rates and let you know what home loan options are available for your individual situation. Their staff is committed to providing the best customer service around.