Posted on: October 12, 2018
There are tons of lenders to pick from, from small, local banks to large companies that conduct the majority of mortgages. All of them have their pros and cons.
Whichever lender you choose, though, you want to make sure that you’ve made the right decision. The wrong lender could lead to slow home buying process, and they may not have much experience with the loan program you’re using.
On the other hand, the right lender could help things go smoothly, save you money and teach you a little bit about the process along the way.
Here are some questions you should be asking lenders before you pick one:
Do they have VA loan experience?
If you’re getting a VA loan, you should make sure that they have VA experience. VA loans are a little different than other programs, and while they’re the best option for veterans, they can take longer to close.
To avoid any issues, such as paperwork or the appraisal, its best to find a lender that has VA experience. Also keep in mind that not all lenders are VA certified, so just because you know someone who works at a bank doesn’t mean that they can help you.
What mortgage rate are you getting?
Mortgage rates vary depending on a number of factors, including the lender. Some lenders may be able to reduce your mortgage rate even further than what’s already offered.
With mortgage rates on the rise, it’s important to make sure that you’re getting a good rate. Spending some time shopping around can end up saving you a lot in the long run.
Also be sure to ask if they offer mortgage rate locks and if they charge for this. Depending on the mortgage rate and the cost, this could be a deal breaker.
How long will the loan take to close?
On average, VA loans will take a little over 30 days to close. However, not every lender works this slowly – or, depending on how you look at it, this quickly.
You should be upfront with lenders and ask. They should give you an estimate on how long it will take. If the new home is an urgent purchase, it may be worth finding a different lender that promises a quicker process.
Has anyone you know used them?
Referrals are big in the mortgage industry, so lenders are going to do their best to impress.
Ask friends or family – particularly those that used a VA loan – who they used when they bought their home. A good review is a promising sign, and it’s worth seriously considering that lender to do your loan.
What is the loan process like?
For the most part, the VA loan process is going to be the same with each lender. But you should still ask whatever lender you’re talking to.
By asking, you’ll learn about their loan process while finding out more about how they work and how you communicate together. The lender might also be required to follow certain steps because of the company they work for. Their answer might not be the reason you pick them or not, but it’s worth knowing.
What are all the costs you need to know?
Mortgages are always bigger than the total cost of the loan. Aside from your downpayment (if you choose to make one), you’ll have to pay other costs, including:
The good news is that the seller of the home often covers some of these costs, and some lenders charge different amounts for different things.
Are there penalties for paying early?
If you suddenly win the lottery, you may feel like paying off your mortgage. Unfortunately, this will almost ensure that you pay penalties.
For lenders, your home purchase is an investment. If you pay some or all of it off early, they lose out on some of their potential income. To protect themselves, they often charge penalties for paying early.
Some lenders will let you get around this, to an extent. Paying a month or two early might not incur penalties with some lenders while saving you money in the long run. It’s worth asking, in the event that you get some extra cash.