Questions to Ask Before Signing
Your mortgage loan will most likely be your largest investment and expense. Be smart. Here are questions to ask BEFORE you sign the loan application.
- What type of loan is this? Fixed, adjustable, balloon, etc.
- What is the contract interest rate?
- What is the annual percentage rate (APR)?
- How long is the repayment term? 30, 40, 20, 15 years?
- How much down payment is required?
- Are there funds available to help you with your down payment should you need assistance?
- Will you be required to escrow your taxes and insurance, or do you have a choice to pay those yourself?
- What is the amount per month that you’ll pay towards your escrow (if you’ll be escrowing)?
- Will your loan have private mortgage insurance? If so, when and how can you get that removed?
- What are the estimated lender’s fees for this loan, including origination fees/points, broker fees, funding fees, application fees, etc?
- What is your total estimated monthly payment (with principal, interest, taxes and insurance)? Does it fit comfortably within your budget?
- What is your total debt to income ratio?
- Is there a prepayment penalty on this loan? If so, for how long, and what is the penalty if you pay off the loan early?
- Do you get something in writing when you lock in the rate for your loan? Is there a penalty if rates go down and you wish to switch to a lower interest rate after you’ve locked?
- When does the loan get locked (at application, at loan approval, or at another point in the process)?
- How long before the lock on the rate expires?
- Will you get a copy of the Good Faith Estimate (GFE) at application?
- Will the lender provide you with a written loan commitment? If so, when?
- How much will your appraisal cost?
- How much will attorney fees, recording fees, title company fees, etc. cost?
- What inspections are required, and who pays for those (buyer or seller/borrower)?
- Are you able to buy your interest rate down? Should you?
- Will you need flood insurance, a survey, or private home inspection?
- Are any of the costs negotiable or able to be waived?
- Did you get a second opinion or quote for this mortgage loan? If so, how does it compare?