Section Subtopics Before You Apply 6 Months 3 Months 1 Week Do's Don'ts 10 Questions For Your Lender

  It will be necessary for you to ask your prospective lenders

  a number of questions specific to your personal market,

  credit, income, and asset situation. However here are ten

  basic questions to get you started.  Asking these questions

  can get you very quickly to the heart of a loan officer's

  (and by extension, the lender's) abilities and character,

  allowing you to hone in and answer quickly the question

  of whether this lender will be a good match for you.

  What documents will I be asked to provide?

  Although different lenders may require different

  documents, most will require several forms of proof of

  income and assets before approving your loan.  Find out

  which of these you'll need so you can be prepared for the

  application ahead of time.

  Can you as a loan officer enter my application into a

  desktop underwriter?

  This sounds tricky but is really one of the most important

  questions you can ask your prospective loan officer.  It

  has become typical in the industry for the loan officer to

  enter your information into underwriting software on his

  or her laptop as you provide it, so that  a pre-qualification

  over the phone or during an application  interview has

  nearly all of the legitemacy of a verified pre-approval.

  However, there are still many lenders out there who take

  your application on paper (and collect your application fee)

  before being able to enter your information into the

  underwriting software.  Unfortunately for you, this would

  mean choosing a lender, sacrificing your time to meet him

  or her, and handing over an application fee before you've

  received anything more than the loan officer's best guess as

  to whether he or she can do it at all, much less what the

  terms of the loan will be.  Don't waste your time

  -- go with a loan officer who can desktop underwrite your

  application.

  Can I have a copy of your good faith estimate showing

  rate, terms and itemized closing costs and fees for this

  loan?

  This is the most important step you can take. Don't settle

  for "That's a terrific question!"; by law, mortgage lenders

  must give you this information. Be sure you get a copy

  of your own that you can take with you when you leave.

  Don't settle for a promise to have that information at the

  closing; by that time, it will be too late to fix anything.

  How long have you been working as a loan officer?

  It's a tough break for the earnest beginner, but there is a

  very steep learning curve in lending and your loan process

  will be much more of a mess if you're under the guidance

  of someone with little or no experience.  Ask for someone

  who has been in the business for at least a year and

  preferably 2 or more.

  Can you supply References?

  You'd ask for references if you were hiring a babysitter, a

  contractor or an employee, why not for your loan officer? 

  Can you tell me how each of these fees and closing costs

  were calculated?

  Many "junk fees" are just dollar amounts arbitrarily tagged

  onto a loan with no real-world justification whatsoever.

  These kinds of fees have a wide variety of different names,

  such as "origination fee," "underwriting fee," "processing

  fee," "table funding fees," "waive escrow fees," or

  "document preparation fee." Many are legitimate, however.

  This isn't an opportunity to interrogate your lender,

  assuming his or her guilt.  Rather, it is a chance to know

  what you are paying for, allowing you to compare prices

  between lenders.  Leading to the very important next

  question:

  Will there be any more fees between now and when I

  close?

  A lot can be slipped in between the application and the

  closing without you knowing it.  Keep that Good Faith

  Estimate and make sure that the closing costs (as

  opposed to the prepaids or escrows, which are much

  more of an "estimate") stay close (within a couple

  hundred dollars) to the original.  

  How long is the lock period?

  Strangely enough, some lenders will limit their liability

  by limiting their lock period to ten days or less.  This

  means that the rate they quote you at your application,

  30 or more days before you close, very likely will have

  nothing in common with the rate available when it is time

  to lock and close.  Don't settle for a lock less than 30 days,

  and preferably more. Additionally, some lenders will

  charge a fee or deposit to lock the rate for more than their

  typical period, often hundreds of dollars.  Don't pay this

  fee if you can avoid it.

  How long will this process take?

  The entire process can vary and depend on a number of

  variables, some in and some out of your control.  Most

  lenders and brokers take between 30 and 45 days, but the

  actual process can take as few as 21 days and as long as

  90 for some transactions. The actual time will depend on

  several things, amonth them are how quickly the lender

  can get an appraisal and verification from third party

  sources like your landlord, employer, and the institution

  holding your assets. 

  Will my loan have a prepayment penalty?

  Some loans include a prepayment penalty.   Generally,

  prepayment penalties are assessed on higher-risk loans,

  such as subprime credit loans, or 100% financing loans,

  but there are instances where they can be found on more

  conventional loans as well.  Again, avoid these if you can.

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10 Questions