How To Choose A Mortgage Lender – Streamline Brokerage

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How To Choose A Mortgage Lender: 5 Questions To Ask

Are you looking to buy your first home? We’ve compiled a list of 5 essential questions you need to ask to choose a mortgage lender that best fits your requirements and gain some critical insights to put you at ease during the mortgage process.

Which Types Of Mortgage Terms Do You Offer?

Mortgage loans aren’t a “one size fits all affair”. This is because multiple programs may be appropriate for you, so it’s crucial that you discuss your options with your mortgage lender.

Don’t forget to talk to your lender about the following types of loans:

Conventional Fixed-Rate Mortgages – A 30-year conventional fixed-rate loan is the most common type of mortgage loan. Because the term is so long, monthly payments are lower, and the fact that rates are fixed means that your interest rate will remain the same throughout the life of the loan. However, the longer the term of your mortgage the more interest you’ll pay on loan. So, choosing a 15- or 20-year term may be worth it if you can afford higher monthly payments.

Adjustable Rate Mortgages – Unlike fixed-rate mortgages, the interest rates of ARMs change over the life of the loan. If you choose to obtain an adjustable-rate mortgage, your interest rate will increase or decrease as the market fluctuates after the fixed period expires. Your mortgage payments differ each month, making budgeting a bit challenging. The good news is that caps on this loan type limit the extent to which your interest rate and monthly payment can increase periodically and over the life of the loan.

What Will My Fees And Payments Be Like?

As a home buyer, one of the first things you must consider is your budget. Knowing how much home you can afford can help narrow your search and keep your expectations realistic. When you ask your mortgage lender how much home you can afford, they’ll proceed to review your income, assets and credit.

Once you analyse your financials, your mortgage lender will provide you with the potential cost of your monthly payments and break down the expenses involved. You’ll learn about your interest rate, closing costs, property taxes, and additional fees that are factored into your payments. Additionally, your mortgage lender can help you determine how much of a down payment you’ll need.

Are There Income Requirements For Buying A House?

There is no set dollar amount of income you need to have to buy a home. However, your income does play a significant role in how much home you can afford.

Lenders look at all your sources of income when they consider you for a loan, including commissions, other benefits, child support and more.

Do You Need Mortgage Insurance?

A lender will generally require you to pay for LMI (Lenders Mortgage Insurance) if your home loan deposit is less than 20% of the total value of your property – so if your loan-to-value ratio (LVR) is more than 80%. However, as different lenders may have different rules, it could be worth checking each lender’s policy.

Do You Offer A Mortgage Rate Lock?

A mortgage rate lock is an agreement between you and your lender that says your interest rate will stay the same until closing, regardless of market movements. Rate locks are important because they keep your loan costs predictable. When you get a rate lock, you don’t have to stress about finding a home immediately, because you know that your interest rate won’t increase.

Talk to your lender about rate locks and how long they’re valid. Look into current market rates (are they high or low?) and whether you should lock your rate.

Some lenders will drop your interest rate if market rates decrease after you lock your rate, so be sure to check with your mortgage lender.

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Asking your potential lender a few questions like these can help steer you in the right direction and help you prepare for the road ahead by making the process easier and less stressful.

You could also connect with someone from our team to answer any queries you may have.

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