Hi, John Herman, PropertyUp and today I want to give a little information about mortgages and how to ask some important questions of your mortgage broker.
This information and more, is available through any of our PropertyUp agents, who will provide you with the PropertyUp Buyer’s Tool Kit. I’m just going to skim some of the important questions to ask your mortgage broker when applying for a loan.
- Are your rates and terms, fees and closing costs negotiable?
If you start asking that right off the bat you know if they are or are not and it’s also a good way to let a mortgage broker that you are educated about the mortgage process.
- How long does my rate lock last for?
This is a very good question to ask because sometimes the buying process goes longer than you expect it to and if it does you may lose that interest rate you agreed upon. Some rate locks can be 30, 60, 90 days and as you can close before the lock is expired you will avoid extra costs that occur when the lock period is exceeded. These costs can be high, so it’s best to be sure your rate lock period is sufficient.
- Which type of mortgage plan do you think would be the best for me?
There are many mortgage plans, so it’s good to know which one the mortgage broker thinks is best. This could depend on a lot of different things like your interest rate, or how long you’ve been at your job. Many things can make a difference in the loan your broker recommends.
One more thing I want you to think about is how much money you put down on a house.
I am also a private lender and I understand what it is when you’re looking at money leverage and borrowing and down payments.
Everybody seems think the best thing to do is the conventional loan with 20% down because that’s how we’ve been conditioned to think. But actually, think about it this way, if you run into an issue down the road where you have to let the house go into foreclosure or something to that effect, you have a greater amount of money tied up in the house than may be necessary. For instance, say you’ve purchased a $200000 house and you put 20% or $40000 down. In the event of a foreclosure, that’s going to be gone.
If you consider one of the newer conventional loans, which may only require 5% or 10% down on a $200000 loan, now you’ve only got $10000 or $20000 invested in the house. This way, in the unfortunate even of a foreclosure, you’ve got more money left in your pocket instead of the bank’s pocket. So it’s a way to protect your level of risk if you can look into the lower down payment conventional.
Yes, your payments will be higher each month, but if something bad happens you won’t lose as much.
I just wanted to give you those tips, hopefully you found them helpful, and if you want more information, contact me and let’s start a conversation.