Firstly, home loans often take at least a decade to be fully paid. Secondly, we all know how expensive it is to buy a house.
Luckily, we can find the best home loan deal if we know who to ask for help. This is where hiring a mortgage broker could come in handy.
In a nutshell, a mortgage broker acts as an intermediary between you (the home buyer) and the mortgage lender. What they will do is shop around for the best home loan deals and negotiate with lenders on your behalf. That way, you won’t have to spend hours finding a suitable loan.
However, we understand if you are weary whether you are hiring a legit mortgage broker or not. That said, we have listed down eight questions you should ask a broker before signing:
One of the integral questions you need to ask your mortgage broker is the different types of loans that will fit your needs.
Ideally, you should give them an idea of your financial situation. That way, they can offer you a home loan deal that suits your budget. The offer should also come with a breakdown of fees and other possible expenses.
Also, note that there are plenty of mortgage programs for buyers, but not every option will be tailored to your financial situation. Will you pick an FHA loan? Will you be better suited for a conventional mortgage?
Your mortgage broker will discuss with you in detail the different loan programs that will be best fitted for you and why.
It all boils down to making the right queries. The mortgage officer should be able to pick out the best options for you.
You need to consider the amount of money you have and the property you’re willing to purchase when considering the down payment.
Let’s say that you want to pay less for a property that needs a lot of updating or repairs so that you’ll have more money to pay for these things.
You may also strike a much better rate if you place a 15% down and pay small mortgage insurance instead of putting 20% down.
It still depends on the structure of various loans. That’s why you must choose a good mortgage broker to crunch the numbers for you in different scenarios.
This will depend on your current financial situation.
With a fixed mortgage, both the mortgage rate and payment will stay the same for the entire mortgage term. This usually lasts for about five years.
If you’re a first-time homebuyer or risk-averse, it makes sense that you opt for a fixed mortgage. But this stability does come with drawbacks. Chances are, you’ll be paying higher initial rates than you would with a variable mortgage.
Meanwhile, with a variable rate, both the mortgage rate and payment can change anytime throughout the entire term. So, when the rates go down, the amount you need to pay also decreases. But when the rates go up, so will your payment.
A variable mortgage usually has lower rates than a fixed one. However, before signing up, see to it that you’re open to the possibility of your rate going up throughout the whole mortgage term.
There are also plenty of special down payment assistance programs at the local, state, or national level. A great mortgage broker usually has deep knowledge about these programs, helping you know whether you qualify or not. And if you do, you have the chance to pay your mortgage faster.
Usually, some of these are income-based, while others are based on the specific location that your property is in.
So, even though you think you don’t qualify for an income-based loan, you still need to ask this type of question.
The interest rate, which is usually charged along with the loan, also plays a significant role when choosing a mortgage broker.
You need to know what the annual percentage rate (APR) will be. Usually, the APR will add to the interest rate and lending fees and then divide them by the term of your mortgage.
Even if you’ve made changes with your finances, a lender can still decline, even if you’ve gotten a pre-approval.
Similarly, it would help if you asked the lender for a checklist of things that will prevent you from losing your loan approval. One of the most common ways you can end up losing your loan approval is by buying a car while you’re purchasing a house.
Luckily, the best mortgage brokers in Auckland can help you go over what you shouldn’t do. That way, your loan goes without a hitch.
If it’s the first time to buy a home, you should ensure that you aren’t making the most common mortgage mistakes.
There are also a couple of lenders out there that will be charging you extra fees when you make payments or pay off your mortgage early.
Some prepayment penalties are often hidden in the fine print. Therefore, many people aren’t aware of these prepayment penalties until it’s too late.
That’s why you need to ensure that your mortgage broker looks for a loan that won’t be penalizing you if you pay too early.
In the same way, you should also be aware of the fees when you apply and get approved for a mortgage.
That’s why it’s crucial to ask your mortgage broker if there are any hidden costs so that you can budget accordingly.
You should also expect different fees:
- Appraisal fee
- Attorney and land transfer fees
- Credit full fee
- Home inspection
- Land transfer fee
- Recording fees
- Registration of title
Before meeting with your mortgage broker, you should take note of these questions. That way, you won’t forget any questions that you should ask.
Asking the right question can help you ensure that you are working with a reliable and trustworthy mortgage broker.