Questions for Your Potential Mortgage Broker or Lender part two

Welcome back to part two of our Questions for Your Potential Mortgage Broker or Lender.

Does the lender offer Loan Rate locks?  This is a very good question to as your lender.  Interest rates are constantly changing for the worse and for the better.  Once you find and interest rate that is suitable to you, you need to make sure that you lock it in.  If they don’t offer a lock on the mortgage interest rate then you may not want to deal with them.  If they do some of the other questions you are going to want to ask are do they chare for the interest rate lock?  Also, for how long will the lock last?  Once you know these answers make sure as always to get it in writing.

What is a prepayment penalty and is there one for the home loan you are trying to receive?  A prepayment penalty is a fee that you are charged if you pay off your home loan early.  In most states now prepayment penalties do not exist so you should ask depending on the state that you are in.  If there is a penalty find out how much it is and for how long is it in effect.  Some of them are only in effect in the first five years of the loan.

Can the lender approve loans from their office or do they have to outsource the approval?  Make sure to ask the mortgage broker of they can handle the underwriting themselves.  FHA and VA type home loans typically take a little longer to get approved but, some lenders will meet the guidelines of the government requirements to approve or disapprove without directly sending it to the VAS or the FHA.

How long will to take to find the home loan?  Mortgage funding usually on average processes between 21 to 45 days.  Make sure that you also ask, on what could hold up your closing on the loan.  How long after you have submitted the final application approval will it take to find the loan. 

Finally, Is there a yield spread premium?  If the loan officer is getting one then it will be on the paperwork at closing.  This is somewhat contreverisial.  The yield spread premium is a commission that is paid to representative by then lender.  Some are at odds over this because people argue that the loan would be chaeaper without it but, if everyone is satisfied then why should it matter?  If you have a concerns about this make sure you ask as early as possible because it is too late at closing.

Being a First time home buyer can be stressful but, if you know the right questions to ask then it can be much easier.  Always do your research and never be afraid to ask a question or get the meaning to a word or term you did not understand.