When it comes to screening lenders there are several things you need to consider before making an informed decision. You need to ask your lender the right questions to get this information. Here is what you need to know.
How Long is my Lock Period?
The interest rate for any given loan you find on the Internet can change in just the amount of time it takes you to fill out the contact form on the website. You need to ask the lender or broker how long they will guarantee the interest rate you are being quoted. This guaranteed period is called the mortgage lock period. As long as you close prior to the expiration of the lock the lender will guarantee your interest rate.
Are There Any Prepayment Penalties?
You need a clear picture of any fees or penalties associated with your mortgage. One important penalty to be aware of is the “prepayment penalty.” This is a fee the lender charges you if you terminate your mortgage with full payment before the term is up. If you need to sell your home or want to refinance later down the road, this penalty unwanted expense. Negotiate for a mortgage that does not include prepayment penalties.
What Documentation is Required?
Your lender may require an appraisal, a survey, title search, private mortgage insurance, and homeowners insurance prior to closing on your loan. Staying on top of all this paperwork will help alleviate unforeseen delays that could prevent you from closing. If you are unable to close prior to the expiration of the lock period you could lose the interest rate guaranteed by your mortgage lender.
Louie Latour has twenty years of experience in the mortgage industry as a mortgage broker. He is the owner of Mortgages for Dummies, a mortgage help site devoted to saving homeowners money with a free guidebook “Five Things You Need to Know Before Refinancing a Mortgage.” Sign up for your free guide today at: http://www.refiadvisor.com
