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6 Questions To Ask Your Lender Before Getting A Mortgage

Monday, February 19, 2024   /   by Christine Elwood

6 Questions To Ask Your Lender Before Getting A Mortgage

Shopping for a mortgage is about so much more than simply learning what your monthly payment will be. In order to make informed decisions when buying a house, you need to ask the right questions and find a lender that fits your needs. Asking questions makes it easier to compare loan opportunities with various lenders and learn exactly what goes into calculating your monthly mortgage payment. Ask your lender these six questions to make sure you have the information you need when shopping for a mortgage.

  1. What Kind of Interest Rate Can I Expect?
    This is the big question, so it pays to ask right away. Get a quote for the direct interest rate and the annual percentage rate (APR), which includes associated loan fees and charges. The interest rates available depend largely on your credit score, with a higher credit score leading to lower rates. To raise your credit score, make all monthly payments on time, pay more than the minimum requirements, and resolve outstanding debts.
  2. Is It a Fixed or Adjustable Rate?
    With a fixed-rate mortgage, your interest rate remains the same for the duration of the loan. An adjustable-rate mortgage, on the other hand, has an interest rate that can change based on the market. Many buyers opt for fixed-rate mortgages when buying a house, but no matter your preference, it's important to know whether your rate will stay the same throughout the loan.
  3. How Much Will I Need for a Down Payment?
    The minimum down payment for a mortgage varies based on the type of loan you're pursuing, but the minimum isn't the only factor. Typically, a higher down payment will secure better terms for your mortgage. If you're opting for an FHA or USDA loan, then the minimum requirement may be different from a conventional mortgage. Ask your lender about how much down payment will be required to get the terms that work for your needs.
  4. Will I Need to Purchase Mortgage Insurance?
    Your down payment will also impact whether you will need to purchase private mortgage insurance, and insurance will typically be required when your down payment is less than 20 percent of the home's value. So, if you'd like to avoid the added cost of insurance, start saving for a significant down payment.
  5. What Fees Can I Expect?
    Most fees relating to your loan are added with closing costs, but certain fees are calculated differently. Origination fees are calculated as a percentage of the total loan value, usually 1 to 5 percent. Instead of being taken at the time of settlement, these fees are taken from the amount you borrow. Finding out exactly what your lender's fee will be is crucial because it helps you understand exactly how much you'll need to borrow to reach the amount you need for the home.
  6. How Do You Communicate with Clients?
    Every question on our list can lead to more questions as you discuss things with your lender, so it's important that you have a way to keep lines of communication open. Ask your lender how they communicate with clients, and make sure that you have an easy point of contact whenever you need answers to your questions.

Securing a mortgage is one of the most important steps in buying a house, so it's worth taking the time to learn exactly what your lender has to offer. Asking the right questions goes a long way toward helping identify the mortgage options that are best for you.


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Strong Will Real Estate at KW Vermont
Cole Elwood
68 Randall St
South Burlington, VT 05403
802-735-2167

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