As you look for the best funding options, you will likely have many questions. At Berkshire Hathaway HomeServices we suggest that while you gather the answers you need, you are also interviewing a potential lender. Read on the following five open-ended questions to get examples of how you can gather information while also getting info about the lender.
1. Should I Buy a Home Right Now?
If the entirety of a lender’s answer about whether or not you should buy a home has to do with the real estate market then you may want to find another lender. Yes, the market is important but other personal factors are more important. What is your debt-to-income ratio? How much do you have saved up for a down payment? Can you afford a monthly mortgage payment? These are the factors a lender should consider and should discuss with you.
2. Which of My Personal Debts Should Be Paid Down Before I Buy the Home?
Ideally, you would pay down all personal debts but that is likely not realistic. If you have the money to pay some debts but not all, talk to your lender about which ones make the most sense. If their immediate response is to tell you about their loans that can help you refinance your debt, consider another lender. You want someone who will be honest. For example, if you have credit card debt then it should almost always be paid off before any other type of debt.
3. What Credit Score Are You Looking For?
Yes, lenders will consider several factors when deciding if they are going to lend to you but they very likely have a specific minimum credit score. Generally speaking, 700 is considered a good score. 800 is considered excellent. If you are between these two numbers then you will need your potential lender to give you an honest assessment of what they require.
4. Is it Work it to Pay Points to Lower My Interest Rates?
It may be possible for you to lower your interest rate by paying for mortgage discount points. In most cases, a discount point will be about 1% of the loan amount. For example, if you were borrowing $250,000 a point would be $2,500. When you ask about points, your lender should explain the process in detail as well as what your options are.
5. What Will My Costs at Closing Be?
The company that collects your payments and handles any late or missed payments is called your mortgage servicer. Your lender may service their own or they may outsource this. Talk to them about what your closing costs will be, who will service your mortgage, and other details that would otherwise not come up until the last minute.