Buying a home is an exciting process and having the right lender can make the process much more enjoyable. There are a couple of very important questions you should be asking your lender before you decide which direction to take in your home buying experience.
The most important question you can ask your lender is “what type of loans do you offer?” There isn’t a one-loan-fits-all choice and knowing which type of loan will work best for your needs is key.
- Fixed-rate loan: The process is as simple as the name suggests. A fixed-rate mortgage means your interest rate will remain the same level throughout the entirety of your loan.
- Adjustable-rate mortgage: In this case, your interest rate begins at a lower rate for an introductory period. After a few years, the rate becomes adjustable (to a certain extent) depending on the market.
- FHA loan: If your income isn’t exactly where you wish it was, this is the loan for you. The Federal Housing Administration loan allows the buyer to put down as little as 3%.
- VA loan: If you or your spouse served in the military, you may be eligible for a Veterans Affairs loan. This program guarantees the loan and allows the buyer to finance up to 100% of the home cost.
- USDA loan: Rural areas are offered this government-backed mortgage plan, and is offered by the U.S. Department of Agriculture Rural Development in areas with lower population. The USDA loan also allows the borrower to finance up to 100% of the home, if needed.
- Jumbo loan: If you are looking to buy a home in a pricey housing market, you may qualify for a jumbo loan. This type of mortgage exceeds the limit for government loans, which will depend on the cost of living in your area.
Now that you know your loan options, it’s important to ask, “what do you charge at closing?”
- The closing costs you pay to the lender vary by company, depend on whether you use a realtor or not, and consider any other third party that may assist in the sale. These variables can impact your total out-of-pocket costs due at signing, but generally you can expect to pay three to four percent of the sale price of the home.
Finally, you should ask, “how much time is needed to complete a mortgage?”
- Generally, this would not be an issue, but with the housing market booming like it is now, it’s important to know that time is on your side. Keep in mind, however, that some loans take longer to process, so your lender may not have complete control over the time your loan takes.
Have further questions? Don’t hesitate to contact us, and we can provide more information on how we can help you with your home buying experience!
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