What You Should Ask Your Geneva, IL Mortgage Lender Before Working with Them

When looking for a mortgage lender in Geneva, doing your research and knowing the right questions to ask is essential. Every lender is different. Therefore, it’s vital to learn as much information as possible about each lender before moving forward with the mortgage application process.

Whether you are looking for a loan to refinance or purchase a home, it’s essential to ask your mortgage lender the questions below.

How Much Can I Borrow from a Geneva Mortgage Lender?

Before settling for a mortgage lender, ensure you ask them about your borrowing limit. Most lenders consider your credit history, employment status, and income level compared to the debt you have. These factors help the lender determine your qualification level and assess whether you will have the ability to repay the loan.

Before you start looking around for your dream home in Geneva, ask the mortgage company about getting prequalified.Mortgage prequalification will make the process seamless and smooth.

Ensure you also ask the lender whether you are eligible for any special mortgage programs. For instance, first-time buyers and military veterans may qualify for special mortgage programs sponsored by the government.

How Much Deposit Do I Need?

Different lenders have different deposit requirements. However, it’s advisable to have at least a 20% down payment of the house’s purchase price when shopping for a mortgage. A 20% deposit will help you get the best interest rate and loan terms for your mortgage.

While it’s okay to have a lower down payment percentage, chances are, the mortgage company will add private mortgage insurance (PMI) if your deposit is lower than 20%. Your percentage down payment will also impact other variables such as loan terms, monthly payments, and the interest rate.

Before settling on a lender, ensure you ask them about the minimum down payment required to get a home loan in Geneva. Remember also to ask if you qualify for any cost-saving or down payment assistance programs. The answer to these questions will help you decide the best lender for you based on your needs.

What is Your Percentage Interest Rate?

This is one of the most important questions to ask your lenders. Ask them to share their direct interest rate quote for the mortgage and its corresponding APR (Annual Percentage Rate). Ensure you ask different lenders for their interest rates and APR fees.

A lender’s annual percentage rate often accounts for mortgage lending rates and any additional charges related to the loan. Therefore, the APR helps you compare Geneva mortgage lender fees to find one that best works for you. If you’re not satisfied, don’t hesitate to shop around until you find a lender that you’re comfortable working with.

Adjustable-Rate vs. Fixed-Rate Mortgage

There are two different types of mortgages: an adjustable-rate and a fixed-rate mortgage. Knowing the difference between the two is vital if you want to find the best loan to finance your home-buying process.

In a fixed-rate home loan, the interest rate is consistent throughout the loan’s lifespan. This helps borrowers have predictable and steady interest rates and monthly principles over time. Most fixed-rate mortgages often have a 15-30 year term.

On the other hand, the interest rates of an adjustable-rate mortgage (ARM) often change depending on the market conditions. This means that your payments will fluctuate, going up and down throughout the loan term.

Most adjustable-rate loans have a 30-year repayment plan, and they start with a fixed interest rate for a specified amount of time, usually between 5-10 years. If you want to choose the best loan for you, ensure you check the difference between the two types of mortgages.

What Are the Estimated Closing Costs?

When buying a home, don’t forget the numerous fees associated with the home-buying process, especially the closing cost. The closing cost can include appraisal fees, lawyer charges, and loan originator fees.

An estimate of your closing costs will help you budget accordingly to avoid financial constraints in the future. Therefore, ensure you ask your lender to share an approximation of the estimated costs of your loan and the closing costs.

What Additional Costs Are There?

Buying a house is a significant investment, and it requires a lot of planning. Try to find out as much information as possible about the lender and the mortgage. This will help you budget effectively and be more prepared if you face any unexpected costs down the road.

Ask your lender for a Closing Disclosure to help you know the different loan-related fees you will need to cover. The Closing Disclosure lists down all the expenses associated with the mortgage and a detailed explanation of each. You will want to compare your loan estimate with the Closing Disclosure.

If there are any items on the list that you don’t understand, ask the mortgage lender for clarification to avoid making decisions blindly. You can also check out the Geneva mortgage lender reviews online to know more about their service offering.

How Many Discount Points Are Included?

When getting a mortgage for your home, a lender may offer their borrowers discount points. The discount point stands for a fee that the borrower often pays when closing the sale in exchange for a decreased interest rate. One discount point is equivalent to 1% of the total loan amount.

Make sure you ask the lender the number of points included in the interest they quoted for you. If you don’t know much about the discount points, remember to ask for more clarification. You can also enquire about the benefits of buying fewer or more points and how it will impact your mortgage payments.

What to Ask Your Geneva Mortgage Lender

Getting a mortgage to purchase a house is a significant achievement. However, the process is quite complicated, and it involves dealing with a lot of information that you may not be familiar with. Therefore, it’s advisable to ask your mortgage lender as many questions as possible to understand better how the loan works.

Are you looking for a knowledgeable and licensed mortgage lender to help you finance your home-buying process? If so, check out Compass Mortgage. Contact us today, and we will help you get started on your home buying process.

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