So, you’re thinking about buying a home or maybe you’re thinking about refinancing a mortgage and you want to know what to ask a Loan Officer so that you get the best rate possible. However, you’ve not been able to find an easy to read guide that gives you the basics on how to go about this.
You’re in luck; you’ve finally found the article that will give you the inside information on what you should be asking your Loan Officer (and this guide will cover both refinance and purchase transactions for residential properties in the United States).
What is your company’s verifiable reputation online and how long have you been a Loan Officer? This is a must question and it really needs to be asked upfront, so you don’t waste your time with companies that have a bad reputation or Loan Officers with little to no experience.
You want to find a company and a Loan Officer with a great reputation, one that you can independently verify on sites like Zillow.com or the Better Business Bureau’s website (bbb.org).
Describe the loan process with you and will you be my point of contact from now and until the end of closing? Another really important question to ask upfront. Some mortgage companies will pass you from one person to the next during your mortgage loan process. You’ll end up talking to four, five or even six people and let me tell you – in this situation mistakes happen all the time. Another downside is you never know who to call if you have a question or an issue. Try to find a company with a streamlined process; one in which you talk to as few as people as possible.
When is the rate locked? Some people think the rate is locked once they get the quote. That is not true, lenders do not lock in rates just because they provided a quote. So never assume you a quote you got yesterday or weeks ago is still valid. Don’t know what a rate lock is? Not a problem; a rate lock is when the lender confirms they have put a hold (aka lock) on the rate so it doesn’t move with the market.
Not all lenders lock a mortgage rate at the same time. Some lenders lock immediately once you apply, others lock after your loan is approved, and others don’t lock until you close.
And the best lenders give you an option on when to lock. Basically, they let you know whenever you are ready to lock they will lock (which comes after you complete your application and turn your documentation). Just know that if you wait to lock your rate and terms can change. Lastly; make sure you get the rate lock confirmation in writing (via email and an updated Loan Estimate).
How long will this take? A simple question to ask but so important. Unless mortgage rates are low most reputable mortgage lenders should be able to close your loan in 30 days, some 45 days. Banks can take up to 60 – 90 days sometimes if they have a ton of applications to work on. Make sure you ask so you know ahead of time what to expect.
Are there any out of pocket costs and what are the total costs? Usually, you have to pay for an appraisal out of pocket but everything else should be rolled into your mortgage. And when it comes to your total costs (out of pocket cost and everything rolled into the loan) make sure you get a firm number on that. It’s important to know the breakdown but it’s much more important to know the total cost for everything (so you don’t miss what you are paying).
Using these five questions can really help you get a low mortgage rate and better navigate the loan process.