Don’t be intimidated by lenders. Lenders need borrowers just as much a borrowers need lenders, because without borrowers, lenders would would have no business. You have as much right to ask questions as they do.
There are many different types of loans available. Ask your lender the following questions to insure that your loan fits your needs.
- Which of the more popular loans do you offer, i.e. FHA, VA, conventional loans, etc?
- Are there other community-based, rural-based, etc. loans in the area I am looking?
- Are there any grants available in the area I am looking?
- Which loan do you think would be best for me and why?
- Can we negotiate the rate, terms, or closing fees?
- Are there closing costs the underwriter will not allow the seller to pay should I be able to negotiate a contract where the seller pays my closing costs?
- Do I need to purchase private mortgage insurance? What is the premium? (Most lenders do not require private mortgage insurance if a buyer will have a 20% down payment.)
- Who usually services the loans you issue? (This is the company that will collect your monthly payment.)
- What are your escrow requirements? (Most lenders require a few months of hazard insurance and property taxes to be escrowed at settlement.)
- What period of time do you lock in the interest rate if we choose to do that? Do you offer the ability to get a lower rate if rates decrease during that period?
- How long will it take for my loan to be approved? (This is important to know when writing an offer when you will be able to close.)
- Is there a prepayment penalty? (Some lenders will penalize you if you pay off the loan within the two or three years. They want a guarantee that they will earn a certain amount of interest.)