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2017-08-03 20:05:42
Better Money Habits®: Top questions to ask a mortgage lender

Choosing a mortgage lender is a big part of shopping for a new home. In addition to seeking out a competitive interest rate, you want a lender who can provide knowledgeable recommendations based on your financial situation and requirements.

The problem is that if you don't know what questions to ask, you may not get the information you need to make the home buying decisions that are right for you. Here are five key questions to help you get started:

  1. What's the interest rate?
    Ask your lender for a direct interest rate quote as well as the corresponding APR (annual percentage rate) for the loan. Don't be afraid to shop around until you find a rate and APR you're comfortable with.
  2. How many points are included in that rate?
    You may not be aware of points, which are fees paid to lenders at closing in exchange for a reduced interest rate. Ask your lender to explain how points work, how many points are included in the quoted interest rate and whether there are any benefits to buying more or fewer points.
  3. How much money do I need to put down?
    Down payment requirements may vary based on your income, the types of mortgage loan you qualify for and other factors. So don't assume you already know what your down payment has to be. Instead, ask about the minimum down payment required for your loan and how it affects any other associated costs.
  4. Are there any special requirements I should be aware of?
    Are you a first-time buyer? How about a military veteran? You may qualify for special government-sponsored mortgage programs. Ask lenders about what programs or offers you might be eligible for.
  5. What other costs and fees should I know about?
    There's more to the cost of buying a home than the down payment and monthly mortgage payments. Check with your lender about additional expenses such as loan-origination fees, appraisal fees, private mortgage insurance (PMI) and other costs. You can also ask for an estimate of your closing costs. The more you know up front, the better prepared you'll be for any expenses you run into during the home buying process.

For details and more questions to ask, read our Better Money Habits article '10 questions you should ask mortgage lenders.'

 

This publication is provided for your convenience and information only. Bank of America, N.A. assumes no liability for loss or damage as a result of your reliance on information in this publication.

 
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