Contrary to common belief, buying a home involves a lot of things aside from finding the perfect home. Many first-time home buyers usually start their home-buying journey by looking for financing to help them achieve the said goal.
However, most lenders have specific lists of requirements that those who want to buy a house should comply with. As such, they should know what questions to ask lenders to increase their financing applications’ chances of getting approved.
So, if you’re planning or want to buy a house soon, you should consider asking the following from your lenders.
1. How Much Down Payment Do I Need to Pay?
You would most likely pay the down payment depending on the loan program you qualify for. For example, an FHA loan requires a 3.5% down payment, while a VA loan doesn’t require a down payment. Additionally, a conventional loan requires about 5% down in most cases. Also, if you put a down payment of less than 20%, you will most likely be required to pay for Private Mortgage Insurance.
So, if you want to buy a house soon, don’t forget to ask about and discuss the existing down payment options with your lender. Ask them the estimated amount you should put in as a down payment to get the best loan rate and terms.
2. What’s the Best Interest Rate Can I Get?
The current interest rates are much higher compared to that last year. When you want to buy a house, you should talk to your lender and discuss the most effective way to lower your rates.
Many lenders are committed to helping those who want to buy a house to get the best rates. Typically, they will look into our qualifying factors and then tell you what needs to be improved to increase your chances of getting a lower rate. You can also ask them if it’s possible to buy the rate down (paying points) to keep the interest rate further down.
3. When Is the Best Time to Lock My Interest Rate?
Another important question you should ask your lenders when you want to buy a house is when to lock your interest rate. This is because the interest rate changes daily, and when it suddenly goes up, it greatly affects your loan payments. To avoid the unwanted effects of interest rate fluctuation, you can lock it before closing the loan.
Typically, rate locks can be availed for free for 30 days. You can also help with it for a longer period in exchange for a certain fee. So, to get the best out of locking your interest rate, you need to lock it after signing the purchase contract.
You can also ask your lender for suggestions as to when is the best time to lock. However, hiring the service of a reliable real estate company to help you out remains the best option. A reliable company usually employs a team of experts trained to assist those who want to buy a house and ensure that they get the best financing arrangement.
4. How Much Do I Need to Pay for the Closing Costs?
Aside from asking the lenders about the down payment, you also need to ask about the closing costs. This will help you prepare the required budget and conveniently close the loan. Most lenders charge their clients closing costs equivalent to about 3% – 5% of the loan amount. However, you can talk to your lender and arrange a better rate.
Final Thoughts
Knowing what to ask lenders when you want to buy a house via mortgage financing is important. Doing this gives you a full grasp of the entire financing situation and a clear idea of what you would most likely be paying when you go ahead with the purchase.
Although you will surely handle the financial aspect of home buying well with the help of thorough research, hiring a reliable real estate company remains the best option. This is because having a real estate expert to guide you through every step of your home-buying and financing journey ensures you’ll get the best rates and pay only what you need.
If you want to buy a home soon and wish to handle your home buying and financing needs well, contact Nicole Spellman Group today, and we’ll figure out how we can help you.
