Finding a mortgage broker and mortgage lender is a challenging task when you are buying a new home. Especially when you are a first-time buyer. If you find the perfect match for you, you have to ask mortgage questions to your mortgage broker.
Canada mortgage has a lot of jargon; when you are a first-time home buyer, you must ask questions to understand the term.
Asking mortgage questions is essential because you must be knowledgeable about the matter you’re putting yourself into. Buying a home can be the most significant investment you can have. You must be careful to ensure it won’t be taken away from you.
Mortgage Questions You Have To Ask Your Mortgage Lender:
1. Which type of loan is perfect for you?
Choose a broker who gathers enough information from you before recommending a type of loan. Because how can they recommend you if they do not know your background? It is crucial to find a mortgage broker that is committed to you. To ensure you are saving money and making the right decision regarding your mortgage and purchasing a home.
Find the pros and cons of each type of loan. And see what will work for you. Nobody knows your situation more than yourself. So you can figure out what mortgage loan will work best for you if the types are explained well.
2. Interest rate and Annual Percentage Rate
Know what your mortgage rate will be. Different lenders offer different rates. And it will depend on what mortgage rate you will choose. They can provide you with a fixed mortgage rate or variable mortgage rate. Each kind of mortgage rate has pros and cons, and it is essential to know what they are.
The annual Percentage Rate, or the APR, is derived through complex calculations that include the interest rate and all the other related lender fees divided by the loan’s term.
3. How much is the down payment?
Your down payment will depend on how much the home’s purchasing price will be. However, the advisable down payment is 20%, but it is not mandatory. If you pay more than 20% down, you won’t be required to purchase mortgage insurance.
If you’re well-qualified, you can pay a down payment as low as 3%; however, the downside is you have to purchase mortgage insurance which will protect the lender in case of a payment default.
4. Is there a prepayment penalty?
If you are planning on paying your loan early. Ask your lender or broker if there is a prepayment penalty. In some states, they are not allowing prepayment. Mortgage lenders will collect six months of unearned interest as a penalty if you pay your loan early. Ask for the terms, especially when you expect extra cash to pay your mortgage.
5. How much time do you need to fund?
The average loan processing time is around 43 days, including the closing day. Ask your mortgage broker if any anticipated obstacles could hold the closing day and how long the loan will be funded after final mortgage approval.
Information like this cannot be taken lightly. You must know the answer to this question to determine when they will fund you.
6. Do you handle underwriting in-house?
Underwriting means your lender will verify your income, assets, debts, and property details to issue final approval for your loan.
You must know if your lender will handle the underwriting. Ask about how the process and what your expectations will be. Underwriting usually takes two to three days. Ask how you can send them information and the best way to communicate. And finally, ask when you can get an update from them.
7. What are the other costs?
Your mortgage lender will give you a loan estimate. This will include a complete breakdown of the costs associated with your loan; these include lender fees and other third-party vendor fees, including appraisals, title policy, taxes, and closing loans.
Why asking mortgage questions important?
Asking mortgage questions is absolutely necessary, especially when it is your first time buying a home, and you still need clarifications about the term used in the mortgage. There is nothing wrong in asking questions to your mortgage broker; that is why you hire a broker to guide you In the whole mortgage process.
They won’t judge you even if you ask the most straightforward question. A mortgage broker will be happy to accommodate your needs and questions.
Mortgage brokers and mortgage lenders in Canada will not hesitate to answer your mortgage questions. These are not the only questions you must ask your mortgage broker or lender. You are not limited to these questions. Remember, you are not a mortgage expert, so questions are the sky’s the limit.
You can connect with us at Private Mortgage Canada if you have questions regarding your mortgage. You can drop us an email or call us at +1 416-825-0142.