When buying a house or refinancing, you can never be sure when something might turn out problematic. If you are talking about a home loan, you must not leave any pages unturned. You have to compare services, options, and legalities before going forward with the application. After all, you are going to bear with the monthly payments in the future. If you constantly confront hidden costs and other issues, you can’t exactly consider it a pleasant experience. Even if you have a basic understanding of the whole process, asking questions can always help. Let’s check out what you might want to know.
Types of Home Loans
You would see various types of loans in the market. You can categorize it according to the term lengths or fixed or adjustable interest rates. Again, some loan conditions vary with the investor in the loan. Some loans require a high credit score for low-interest rates, while some may not require a higher credit score but have higher interest rates. The less risky it is for the lender, the less you have to pay. An experienced mortgage lender would offer various mortgage programs and solutions after evaluating your specific financial situation.
One such reliable mortgage lender Seattle has is Sammamish Mortgage. They have the best team of professionals who can give you satisfactory mortgage service after careful consideration. You can apply online by safely uploading your documents. You can check out the various loan programs they offer and use the mortgage calculator to get an estimate.
What Would Be Your Best Option in Mortgage?
To know the best loaning option, you have to give all the details the lender asks you. When you answer all the relevant questions, the lender would get an in-depth understanding of your situation and thus would be able to match it with the available options. Remember, they generally look for income, assets, property, and credit reports for inspection.
What Are Interest Rate and Annual Percentage Rate?
When paying for a loan, you should be clear about these two types of interest rates – base interest rate and annual percentage rate (APR). The base interest rate is the rate put on the mortgage alone, while APR includes the closing cost along with private mortgage insurance (PMI) if any. The difference between the two interest rates is the fees that the lender charges.
What Does It Means to Get A Loan Estimate?
The lender needs to send you a loan estimate within three working days upon completion of your application. It has all the details of the broken-down costs along with the closing costs. They have to send you another estimate if there is a chance of changes in rates.
How Long It Takes to Process A Loan?
Usually, it takes around 43 days to process an average loan. You should ask for a tentative date and see how long it will take for the loan to fund after the final approval.
What If You Get A Low Appraisal?
When you get a low appraisal from the lender, you have to make more down payments or monthly payments. The company would only lend you the amount you are eligible for, and you have to pay for the most amount of the purchase. In that case, you can either think about how you can get a high appraisal or negotiate a lower price for the house.
How Much Down Payment Do You Have to Make?
The standard down payment would be 20%, but this is not always the case. You can choose to pay less down payment under certain circumstances, but the interest rate would increase. At the same time, if you deposit more down payment, you can reduce the interest rate to some extent.
Why Do You Need to Lock Your Loan Rate?
The loan rate changes every day due to multiple factors. You can lock the loan rate until a certain period with some extra fees. Otherwise, you have to follow the updated rate at the closing time without any heads up.
What About A Prepayment Penalty?
Most of the lending companies don’t charge prepayment penalties nowadays. But, some may. You should make sure to ask your lender’s policy.
There is no harm in asking more questions even if you know the answers to some of them. The only mistake would be to think that you know it all. You have to be cautious when dealing with financial and legal issues.