9 Questions You Should Ask Your Mortgage Lender


Your mortgage broker will ask you a number of questions when you’re applying for a home loan, but that doesn’t mean you can’t ask a few questions of your own. Buying a home is a huge decision, and the type of mortgage package that you opt for is just as important.

Before you choose a specific mortgage and all the terms that come with it, be sure to ask your mortgage specialist the following questions first.

What interest rate will I be charged?

This is an obvious question, as it will determine how expensive your home loan will be. Luckily, mortgage rates today are still hovering near historic lows and aren’t anticipated to spike anytime soon. Ask your mortgage broker for the lender’s loan estimate, which specifies the annual percentage rate (APR) that includes the interest rate, points, and other fees you will be charged for the mortgage.

How much will I be charged at closing?

Borrowers pay various fees at closing for services provided by the lender, appraiser, title company, surveyor, and so forth. Lenders must provide a written estimate that outlines every one of the costs you’ll be required to pay at closing so there are no surprises on your end. 

When can I lock in the interest rate?

The interest rate that you’re quoted when you first apply for a mortgage will likely change by the time closing arrives. If the interest rate you are quoted is low and is expected to rise over the next little while, you might want to consider locking in the rate so that you’re guaranteed that figure. Of course, you should also keep in mind that there’s always the chance that the rate will decrease. In addition, there may be a fee associated with locking in your rate, so be sure to inquire if they apply, and if so, how much it will cost.

What is the prepayment penalty?

If you prepay the mortgage early, refinance, or lower the outstanding principal balance by more than a specific amount, you may be charged a ‘prepayment penalty.’ Ask for specifics on these charges.

What qualifying criteria do I need to meet for this mortgage? 

Borrowers will be assessed on their incomes, assets, debts, and credit history when applying for a mortgage. Generally speaking, the requirements for conventional mortgages are pretty stringent. However, there are certain mortgage programs that may come with more lax requirements, such as FHA and VA loans. Find out exactly what requirements must be met for the specific mortgage you are applying for, and make sure you are able to meet them.

What documents do I have to submit?

Be prepared to provide a variety of paperwork to your mortgage broker, including a statement of employment, banks statements, pay stubs, tax returns, a W-2 statement, and so on. The more information you can provide upfront, the better the lender will be able to determine how you qualify.

How long will it take to process the mortgage application?

The application process can take a while and can be delayed if you don’t supply all the necessary documents from upfront. Usually, it takes about two weeks to complete before you’re given an answer, but it can take as much as a month or two if there are complications that are met along the way.

What happens if the appraisal for the home comes in low?

Your lender will send out an appraiser to determine the exact market value of the home that you just agreed to purchase. If the appraisal comes in low, it can negatively affect how much the lender will loan you and if you’ll even be approved at all. Your lender will only loan out the appraised amount – the discrepancy will have to come out of your own pocket. For instance, if you agreed to buy a home for $500,000 but it’s only appraised at $450,000, you will have to come up with the extra $50,000 to bridge the gap.

Will my mortgage be sold?

Mortgage companies are legally allowed to sell your mortgage to another lender or investor. When they do, they are required to disclose this information to you. It will be in the contract, but you should ask about it even before you receive the final paperwork.

The Bottom Line

A reputable, trustworthy mortgage broker is a critical link in the chain of professionals that you work with when buying a home. Make sure that you are armed with a variety of questions so that you’re fully aware of the contract you’re committing yourself to before you sign on the dotted line.