Questions For Your Lender

• What kinds of loans are available and which ones do you qualify for?

• What is the interest rate for each type of loan?

• What are the down payment requirements for these loans?

• How long can I "lock-in" the financing at the current interest rate?

• Is a float down lock available in case rates drop after I have locked in?

• What are the other fees a lender may charge me in conjunction with my loan? Ask for a written Good Faith Estimate (GFE) with all fees identified - NO SURPRISES!

• Are funds for a second mortgage available?

• On adjustable loans: (3 year ARM, 5 year ARM, etc.)

  • How often will the interest rate be adjusted?
  • What index is used to adjust the interest rate?
  • Is there a maximum limit on each rate change?
  • How often will the monthly payment be adjusted?
  • Is there a ceiling on payment adjustments?
  • Can the term of the loan be extended?
  • What is the maximum rate that can be charged over the life of the loan?
  • Is there any potential for negative amortization?

• Is there a pre-payment penalty clause? This involves extra charges for paying off the loan before maturity. About 80% of all loans in the United States are paid off early.

• What is the "grace" period? How late can a monthly payment be made before a late charge is assessed?

• What will happen if a payment is missed?

• If you sell your house, will the new buyer (if he/she qualifies) be able to assume your mortgage at the same interest rate?

• Do you have to pay "points" to get your new mortgage? Usually lenders charge points for the cost of giving you a mortgage loan. A "point" is 1% of the loan.

• Will the lender require mortgage insurance (PMI-Private Mortgage Insurance)?

• How is the PMI computed?
  
  Buy vs. Rent Calculator