If you are looking to purchase a new home, or refinance your existing home, chances are you’ve asked the question, “What’s the best rate?”. While your interest rate is important, it’s not the only question you should ask your lender. Below is our list of questions that we suggest borrowers ask before making their home financing decisions.
Do I qualify for any other types of mortgages?
There are many options when discussing home financing. Your lender will listen to your home financing goals, review your current financial situation, and will make recommendations for the best mortgage product for your personal scenario. No two mortgage situations are the same and there are products that tailor to a variety of financing options (i.e. rural living, second home investments, veteran financing, low down payment, etc.).
Why did you choose this mortgage type for me?
Once you receive your recommendations, don’t be afraid to ask your lender why they made their specific recommendations. They should be able to answer the question with how each product best suits your goals and finances.
Do you see anything on my credit report that I can work on now that allows me to qualify for a better option?
When financing a home, just like financing a car, there are different interest rates that reward higher credit scores. You may be a few credit points away from qualifying for a better interest rate. What does that mean for you? With a little time, and good credit decisions, you could lock-in a lower rate and save money on your monthly mortgage payment.
Are you quoting me a rate with mortgage points being charged?
A mortgage point is an out-of-pocket payment that is paid directly to your lender at closing in exchange for locking-in a lower interest rate. Before moving forward with your lender, make sure to ask if the rate quoted is the best available market rate, or if your lender has locked a rate that will cost you extra money at the closing table.
Does buying points to reduce my rate make sense in my scenario?
Everyone’s financial goals are different, so there isn’t a one size fits all answer to this question. When asking your lender if paying to reduce your interest rate makes sense for you, be prepared to answer a few personal questions in order to receive the best advice. Most of the information required is based on how much money you’re willing to spend to reduce your interest rate and the length of time you plan on living in your new home. Your lender will then make a professional recommendation for you. Of course, the decision is always yours! You should never feel pressured to make a financial decision.
Our team of mortgage professionals is always available to help answer your questions before, during, or after your mortgage process. To start your conversation, contact our team at 410.878.9730.