What You Should Know Before Applying for Mortgage Loan

Borrowers are required to prepare thoroughly when applying for mortgage loans.  The process can become easier if you are prepared.  So before you apply for a loan, you have to clarify certain issues that could have a big impact on your loan. 

Ask What Program You Are Tying to Qualify and Inquire About the Terms of the Loan 

You have to remember that there are different types of mortgage programs today.  It is important to know which program you are qualified for.  There are FHA loans, VA loans, conventional loans, and other mortgage loan programs.  Each program has its own set of guidelines, rules, and requirements.  A program may have different requirements for down payment, credit score, and job history.  Most importantly, you have to get detailed information about the terms of the loan.  Are you qualified for a fixed rate loan or a variable rate loan?  Are you getting a 15-year note or a 30-year note?  If you understand the program and the terms of your loan, then the application and approval process could become faster.  

Ask If There Are Upfront Costs

There are lots of lenders who will ask for an upfront application fee.  This is also called application deposit and it is usually required before your papers can be accepted.  An upfront deposit could substantially increase the closing costs of the loan.  Another upfront payment is the appraisal fee.  In most applications, the borrower will have to shoulder the cost of appraisal.  So you need to prepare cash for the appraisal.  Fortunately, there are lenders who do not charge appraisal fees.  So you better ask the lender before you proceed with the application process.  

Know More about Rates and Fees of Your Loan

When you apply for a loan, you have to know the rate and the closing cost that you have to pay.  To accurately compare different mortgage offers, it is advisable to compare only the fees that the mortgage lender actually controls.  These are known as the lender fees and they belong to Section A of Good Faith Estimate or on the form of the HUD-1.  You will find these fees in 800 section.  The common lender fees are the following: underwriting fees, processing fees, application fees, document preparation, discount points, and the loan origination fees.  

Ask About Mortgage Turn Times 

Although getting the lowest rates and closing costs is important, you need to consider how fast the lender closes the loan.  Some lenders can not close a loan on time.  The turn time of the lender reflects that kind of services you will get.  So you should think not just the low rates and closing costs that you can get but also the turn time that can be provided by the lender.  The quality of service is oftentimes determined by the speed of the turn time guaranteed by the lender.  

Borrowers are required to submit important documents.  So you have to ask the lender what documents are needed for your application.  Normally, lenders will require you to submit asset documents and proof of income.