Home Financing – Important Questions to Ask Your Lender

Home financing has exploded in recent years, and with that comes a new degree of complications. There are at least a hundred ways to borrow the money for your next home now. There are several ways for lenders to take advantage of you if you are not doing your due diligence, from hidden charges to all types of prepayment penalties.

Charleston Homes for SaleLet your lender explain all the various home loans and home finance options available. However, when you finally decide on a product you like, ask as many of the following as are relevant to your loan. Premier One says these are the questions that will protect you when buying that Charleston homes for sale.

Home Finance – Questions For The Lender

– What is the interest rate today, how often is it updated, and when it is locked in?

– What is the APR (annual percentage rate; includes fees, points and mortgage insurance)?

– What is the initial rate (if it is an ARM – adjustable rate mortgage)?

– What is the highest the rate can go to next year (ARM)?

– What are the annual and lifetime caps on the interest rate and payment (ARM)?

– How often is the rate or payment adjusted, and when (ARM)?

– What index is the rate based on (ARM)?

– What margin is added to the index (ARM – it might be the index plus 3%, for example)?

– Is credit life insurance required (this pays off the loan if you die)?

– Is there a chance the fees or costs be waived?

– Are there prepayment penalties?

– How long will the penalty in force?

– What inspections are required, are surveys necessary?

– Is the title search or title insurance required, what will be the cost?

– Is it possible to get all this in writing so I can shop around before I decide?

– Could I get an estimate of all the prepaid amounts that I’m paying at closing?

– Are there “points,” and what will these cost (discount points to reduce interest rate)?

– What state taxes, local taxes, stamp taxes and transfer taxes will I have to pay?

– Will a flood determination be required (to see if the home needs flood insurance)?

– What other costs will there be?

– Is there anything else I should know?

Lenders may not like getting a few dozen financing questions thrown at them, but you have a right to ask before you agree to a loan. Did you know that a 1.5% higher interest rate on a $250,000 loan can cost you an extra $50,000 over the years? Home financing can be as important as getting a good price when it comes to saving money on your home.

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