5 Questions To Ask Your Lender
Whether you are buying your first home, move up home or even refinancing, there will come a time that you start a conversation with a professional loan agent or lender.
It’s important to understand the loan program you are agreeing to and to ensure that you have weighed up the pros and cons of different loan program options, to feel confident to make an educated decision.
Right now, interest rates are basically wonderful! Rates are still at all time lows and we are seeing advertised rates well below 3%. However, there are other elements of a loan program that you should understand before choosing which loan program is right for you.
Question 1: What are the rates and monthly repayments?
This is going to be the first question most people will ask their lender. To get an accurate answer to this question, you will also need to ask;
What would the rate and repayments be if I bought a condo vs. a single family home?
What would the rate and repayments be if I buy a home that is part of an HOA community?
Question 2: What are the loan costs?
Some loans will offer incredible rates if you purchase points at the commencement of your loan. This basically means that you pay a little extra to buy down the interest rate, thus reducing your monthly repayments for the loan.
Loans implementation costs will also include items like; appraisal fees, setup and administration costs. There may also be an annual ongoing fee for the duration of the loan.
If you are refinancing, there will likely be a discharge fee from your previous lender as well.
Question 3: What is an offset account and is this something that could be available to me?
An offset account is a secondary account tied to your mortgage. You can put your income into this account and move money in and out as you save and spend. The benefit of an offset account is that whatever amount you have sitting in this account, you will not be charged interest on the loan for that amount of money! It’s a great way to reduce your interest rate while still having liquid cash to use for a rainy day.
An offset account is typically only available for home loans that have a variable interest rate or at least a variable interest rate portion of the loan.
Question 4: What are the variable rates vs. the fixed rates?
In some cases, it serves a home owner to have a home loan on a variable rate rather than a fixed rate, or even a combination of both. It’s important to discuss this with your lender to decide what’s best for you.
A variable rate typically is a higher interest rate but it will offer flexibility that a fixed rate cannot.
Question 5: How many days can you close escrow in?
This is an extremely important question when purchasing a new home in a competitive market. When a seller is deciding who they will sell their home to, the timeframe the buyer can close is impacts the choice of buyer in a big way. Some lenders can close in 21 days, whereas others struggle to close in 30 -35 days.
The last thing you want to be doing is putting in offers for homes and continue to miss out due to not being able to close in a short timeframe.
If you are planning to sell or buy a home in the Bay Area and would like assistance, I would love to hear from you.
Youtube: Kate Barnes Realtor | Dre 02092777