Check out this guide for tips on what to ask your mortgage lender!
Talking to Your Mortgage Lender
Buying a home is one of the biggest purchases we make in our lifetimes. Most of us don’t pay all cash upfront. Instead, we put some cash upfront (the down payment) and take out a special type of loan called a mortgage to make the purchase possible.
When you go through the mortgage pre-approval process, you complete an application that asks you about your finances and the price of the home you would like to purchase. You may also have your credit score checked with a “hard pull” that will appear on your credit report afterwards.
The mortgage lender will perform a preliminary review of your application and accompanying financial documentation, and can issue a letter stating that you are “pre-approved” for a loan of a certain amount. This is called a pre-approval letter, and it can be very valuable to you as you shop for homes and make offers. The lender will then ask for more documentation from you, perform a more thorough review, and finalize your loan amount during the closing period.
Questions to ask your loan officer:
- What are the different types of mortgages you offer?
- For someone in my scenario, what are the best options?
- How can I increase my mortgage pre-approval?
- How does my mortgage pre-approval impact my purchase price?
- What if the appraised value is less than the sales price?
- What are closing costs?
- Do you offer lender credits and/or incentives for working with you?
- Will I be penalized for making a payment exceeding the monthly mortgage amount?
There’s no such thing as a silly question when it comes to your finances. The most important thing is that you feel fully informed and confident in the mortgage that you get.
Should I shop around?
One thing to keep in mind: applying for a mortgage pre-approval does typically impact your credit. If you are interested in applying for multiple mortgage pre-approvals, consider doing so in a short window of time, as it may mitigate the impact on your credit. We recommend discussing your financial situation with each lending institution before completing the formal pre-approval process.
