When applying for a home loan, you must communicate openly with your mortgage broker about your home financing goals and your financial status. Likewise, to find the mortgage that is ideal to your financial condition, your mortgage broker must let in some important information before enabling you to decide to apply for a home loan. Here are some things that your mortgage broker should be telling you before recommending you to a lender:
Can You Lock My Rate?
Interest rates vary almost every day depending on the condition of the housing or real estate industry, so you must learn from your mortgage broker if you can lock your interest rate. Doing this can help you acquire an interest rate that you can repay in the duration of your loan. This can also prevent you from being taken advantage by lenders who provide their borrowers with extremely high interest rates.
Will You Need A PMI?
Some lenders may require you to have private mortgage insurance to protect their investments when you default. In the same way that you hope to be reimbursed from losses when you invest your money in say, stocks, savings accounts, CFD trading, or fixed-income securities, your lender will also ensure that they are protect in some way before granting you a loan. This can be an additional cost on your part, so ask your broker if you can eliminate PMI to your requirements. Doing this will help you learn the conditions about canceling PMI and save on paying an insurance.
Is There Any Prepayment Penalty?
A prepayment penalty is charged on borrowers who pay for their amortization fees before the loan term ends. There are states that ban this kind of fee. But if your lender has conditions regarding prepayment, ask your mortgage broker about its terms and costs.
What Is My Mortgage Term?
The answer to this question depends on the term of your home loan. Some mortgages have low interest rates because you will pay them for a longer period. Your mortgage broker must inform you about this matter so that you can plan your budget. This will be helpful if you are taking out a home loan while also currently investing your money in financial trading like stocks, annuities, bonds, or CFD trading to ensure that you both have a home and a financial cushion to fall back on. You can easily manage your finances if you have a fixed-rate mortgage because your monthly payment will not change. If you want to have a convenient payment amount and schedule, you and your mortgage broker can negotiate with your lender.
How Is Your Mortgage Broker Going to Be Paid?
This is an important thing to know since you are basically entrusting the future of your home and some aspect of your finances to your mortgage broker. Some brokers receive a yield spread premium or a commission from a lender when a deal is closed. This fee is charged to you so that your mortgage broker must let you know about this and how this will eventually impact your payment terms before you pay your closing costs.
Knowing the things above will help you build a better relationship with your mortgage broker. This will also guide you in finding a mortgage broker that will support you in finding your future home.