We have helped thousands of home buyers since our beginning, each one special, each one unique. But they do have some common traits. When shopping for a mortgage, most clients think about the size of their monthly payment. There are many other factors to consider, and here Opes presents six questions (3 last month, 3 this month) and next that your Mortgage Advisor will work with you on before closing
4. “When can you lock my rate?”
A rate lock on a mortgage is a guarantee from us that your rate will stay the same for a specified period, no matter how they fluctuate industry-wide. Traditionally, lock periods have lasted between 30 and 60 days. If possible, you’ll want to make sure your closing date falls within your lock period. Additionally, you’ll want to ask about the specific terms of your lock period. Ask if there is there a fee for locking in at a certain interest rate. Additionally, see if the rate has a “float down clause,” meaning you’d be eligible for a lower rate if they happen to fall.
5. “Will I have to get private mortgage insurance?”
If you’re planning on putting less than 20% down on the home, the answer will probably be “yes.” Since a smaller down payment means that you have less of a stake in the home, private mortgage insurance (PMI) on many types of loans is made a requirement to protect the lender’s investment in the event you would default on the loan. But ask your Mortgage Advisor about your options. Most conventional loans only require PMI until you’ve paid down over 20% of the loan while FHA programs require that security for the entire length of the mortgage. VA programs, on the other hand, often waive this requirement for eligible applicants. Your Mortgage Advisor will help you weigh how much PMI will affect your monthly payment versus the benefit of making a larger down payment or switching loan programs.
6. “What fees can I expect from you?”
Origination fees, or fees charged by the lender to cover the costs of processing the loan, work a little differently than your other closing costs. Rather than getting collected from you at the time of settlement, this one-time fee is taken out of the amount that you borrow. Additionally, it’s expressed as a percentage of the loan value, rather than a flat rate. Typically, this fee will range between 1-5%. For example, a $100,000 loan with a 4% origination fee, you’d receive $96,000, which accounts for the $100,000 loan minus the $4,000 origination fee. To that end, you’d want to ask your Mortgage Advisor what our fee is, percentage-wise, and how much you should borrow based on that rate.
If you have these questions are any additional questions, contact one of our Mortgage Advisors to get started.
Not a commitment to lend. Programs available only to qualified borrowers. Programs subject to change without notice. Underwriting terms and conditions apply. Purchase and rate/term refinance. Primary residence only. Some restrictions may apply.
Opes Advisors, a Division of Flagstar Bank | Member FDIC | Equal Housing Lender